Survival crisis amid the wave of order cancellations

According to CCTV News, some Indian exporters helplessly stated that due to tariffs, many American customers had cancelled their orders in advance. The domestic leather and diamond processing industries in India have been severely impacted and have already fallen into operational difficulties. Many American customers sent emails to Indian exporters at the beginning of this month to inform them to cancel their orders. This move has forced several factories in Kanpur, Uttar Pradesh, which are completely dependent on the US market, to suspend operations. Those small number of factories that are still in operation are also struggling to gradually shift their products to local sales or attempt to export them to other markets.

Public data shows that over 80% of the world's rough diamonds are cut and polished in Surat, Gujarat. Nowadays, in order to survive, these factories can only take measures such as reducing raw material purchases, lowering inventories, cutting working hours, and even significantly reducing prices. Meanwhile, American customers are waiting on the side for the resolution of the US-India tariff issue. The future of related industries in India is full of uncertainties.

The "heavy punch" of two rounds of executive orders superimposed

The current 50% tariff imposed by the United States on India is attributed to the superimposition of two rounds of executive orders by the Trump administration. On August 6th, US President Trump signed an executive order, imposing an additional 25% tariff on Indian products exported to the US on the grounds that India "imports Russian oil directly or indirectly". The announcement stated that, with some exceptions, the new tariff measures will be implemented 21 days after the promulgation of the executive order. Combined with another executive order signed by Trump on July 31, the 25% base tariff and this additional 25% tariff were combined, ultimately resulting in the current total tax rate as high as 50%.

The self-rescue actions of the Indian government and enterprises

India is not completely defenseless against the tariff stick imposed by the United States. At the government level, to alleviate the impact of tariffs, the Indian government has taken the lead in introducing response measures, including suspending the imposition of import tariffs on some raw materials and accelerating trade negotiations with other countries, in an attempt to expand non-US export markets. Indian Foreign Minister Sujatha Singh made it clear that the US-India trade negotiations are still ongoing, but India "has a bottom line that must be adhered to", prioritizing the protection of the interests of its own farmers and small businesses, and all decisions will be centered on national interests. Indian Ambassador to Russia Kumar further stated that despite the pressure from the United States, India will continue to purchase Russian oil. Indian enterprises are also actively seeking self-rescue and striving to adjust their business strategies to adapt to this difficult situation.

Economic growth pressure and future uncertainties

However, even if India responds actively, this tariff move by the United States will still have a non-negligible impact on its economy. According to Citigroup's estimation, the US tariff rate may reduce India's GDP growth rate by 0.6 to 0.8 percentage points. The Federation of Indian Export Organizations has warned that the new US tariffs will affect nearly 55% of its members' exports to the United States. Analysts at Capital Economics, a British economic research firm, predict that India's economic growth will decline by 0.8 percentage points in both this year and next year after the US tariffs take effect.

The event of the United States imposing a 50% tariff on India not only brought about the predicament of a large number of orders being cancelled for Indian export enterprises, impacted their related industries and affected economic growth expectations, but also had a negative impact on US-India relations. In the future, where the trade frictions between the United States and India will lead, whether India can successfully resolve this crisis, and what subsequent impacts the global trade market will suffer are all worthy of our continuous attention.

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