The ripple effect of trade wars extends far beyond economic statistics and international diplomacy. One of the most pressing consequences—yet often overlooked—is the direct impact on employment. The recent tariff hikes by the United States, particularly under former President Donald Trump’s policy resurgence, are beginning to echo across India’s job market, placing multiple sectors under pressure.
Understanding the Trade Tension
The United States recently imposed a 26% import tariff on a range of Indian goods. While the rationale behind these tariffs centers around safeguarding American industries and reducing trade deficits, the indirect blowback on India’s economy—particularly its labor market—is significant.
India, which heavily relies on exports to fuel key industries, now faces shrinking margins, decreased demand, and tough global competition. As a result, companies are being forced to rethink costs, scale down production, and in many cases, reduce their workforce.
Sectors at Risk: A Snapshot
Below is a breakdown of how different sectors in India are being affected, categorized by their risk level of job loss due to the tariff impact:
| Sector | Risk Level | Reason |
|---|---|---|
| IT & ITES | High | Reduced outsourcing budgets, global economic slowdown, tech automation |
| Traditional Manufacturing | High | Rising input costs, decreased U.S. demand, shift toward automation |
| Steel Industry | High | Cheap Chinese imports, declining U.S. demand, global competition |
| E-commerce | Medium | Restructuring, cost-cutting, investor pressure |
| Pharmaceutical | High | Tariff threats on generic drugs, declining exports to U.S. |
| Agriculture | Low | U.S. tariffs largely bypassed; potential for stable or rising demand |
| Renewable Energy | Low | Government incentives and long-term demand buffering against short-term effects |
Deeper Dive: Sector-by-Sector Analysis
🖥️ IT & ITES – High Risk
Despite not being directly targeted by the tariffs, the IT sector is indirectly hit. U.S.-based clients are tightening their IT budgets due to cost pressures across the board. Automation and AI are replacing repetitive IT roles, accelerating job displacement.
🏭 Manufacturing – High Risk
India’s traditional manufacturing sector—textiles, electronics, leather—has been shaken by rising production costs and dropping demand from the U.S. With tariffs increasing the landed cost of Indian goods, international buyers are shifting to cheaper markets like Vietnam and Bangladesh.
🔩 Steel Industry – High Risk
Indian steelmakers are facing intense price pressure as Chinese exports flood the market. With U.S. buyers turning inward or seeking cheaper options, Indian companies are downsizing to survive.
🛒 E-commerce – Medium Risk
Indian e-commerce giants like Flipkart are undergoing restructuring exercises. Though driven partly by performance reviews, the underlying push is cost optimization due to falling investor confidence and global headwinds.
💊 Pharmaceuticals – High Risk
The U.S. is a major market for Indian pharma. Tariff threats and increased scrutiny on drug pricing are cutting into profit margins, causing companies to freeze hiring or reduce operational staff.
🌾 Agriculture – Low Risk
India’s agricultural exports remain largely untouched by new U.S. tariffs. In fact, geopolitical shifts could give India an advantage in select agri-commodities, helping to stabilize rural employment.
Conclusion
The economic cost of tariffs is far-reaching—but the human cost, reflected in lost jobs and income insecurity, is perhaps the most profound. While sectors like agriculture and renewable energy remain relatively insulated, the real storm is hitting industries that rely heavily on U.S. exports and international clients.
In an era of global interdependence, it is essential for both policymakers and business leaders to adopt proactive strategies—ranging from trade diversification and automation upskilling to government intervention—to shield India’s workforce from the fallout of international trade wars.
