Trump’s Tariffs Ripple Across Karnataka’s Garment Sector, Other Industries

Rapid Summary:

• The U.S. has imposed steep tariffs of up to 50% on Indian goods, considerably impacting Karnataka’s MSME exports.
• Key affected sectors include textiles,garments,engineering goods,electronics,auto components,leather products,gems and jewelry.
• Karnataka’s MSMEs employ around 60 lakh people and contribute to sectors like coffee (70% of India’s production), silk (over 50%), apparel ($1 billion in U.S.-bound exports in 2024), spices, and handicrafts.
• Garments faced the hardest hit with landed costs rising five-fold; competing nations like Bangladesh and Vietnam are gaining market share. Some exporters have halted production amid cost pressures and shrinking demand.
• Industry players report order reductions of 30%-35%, payment delays, rising input costs (raw materials/energy), liquidity stress due to short-term borrowings, lost competitiveness against low-cost Asian rivals such as Vietnam or Indonesia.
• Trade bodies call for emergency relief measures: duty compensation packages for exporters impacted by tariffs; export credit at subsidized interest rates; supply-chain reforms along with diversification strategies targeting markets beyond the United States.

Indian Opinion Analysis:
The imposition of steep U.S. tariffs represents a severe challenge to Karnataka’s MSME ecosystem that thrives on price-sensitive global markets like textiles and apparel in the United states-historically a key destination for Indian exports encompassing everything from affordable garments-to-premium product-based semiconductor initiatives alike.Already South Asian competitors’ widened out-market penetration reduce incidents compounding issues-job loss . It indicates systemic reforms critical ensuring financial resilience now future