US-India trade tensions 2025: The whopping 50 per cent tariffs that the US has slapped on Indian goods come into effect from today (August 27). Worst-hit are likely to be textiles, gems, jewellery, carpets and furniture, and shrimps.Now that exporting these goods to the US is no longer profitable, will they become cheaper for Indian consumers?At a very simple level, this seems logical — if gems or shirts or leather shoes are not going to the US, there will be a larger quantity of them in the domestic market, and thus their prices will fall. However, the picture is more complicated than that. Let us break it down.Tariffs are basically a tax a government imposes on goods coming into it from other countries. This tax is often passed on to the customer buying those goods, thereby making them more expensive. So if Indian carpets become more expensive for US consumers, they will switch to carpets coming in from other countries, say Bangladesh or Pakistan, which face lower tariffs.Also in Explained | ExplainSpeaking: How Trump’s tariffs are hurting the US economyThus, Indian exporters will suffer. One way out for these exporters will be to sell their goods in India itself. But there are several reasons this may not work out for them.Difference in qualityMany of these goods, be it textiles or furniture, are low-margin. This means that there isn’t much difference in the costs at which they are manufactured and sold, and what makes the business profitable is the scale. So many clothes or gemstones are sold in the US that exporters make enough money on the whole. This money is of course being made in dollars.Also, goods made for export conform to the standards and specifications the destination country wants. Often, this means export goods are of higher quality than the ones sold in India.Story continues below this adIf manufacturers were to now sell these products in India, at the prices they will fetch, they are unlikely to make the same kind of profit as in the US.Thus, the Indian market — taking into account people’s spending power and appetite for the products concerned — does not really have the capacity to absorb all the goods suddenly made surplus.It makes more sense for manufacturers to find other markets, like the European Union, the Gulf countries, etc., than try to sell in India.The individual exporter’s capabilitiesHowever, this does not mean that every trader will be able to wait to find a new market. The bigger traders can afford to hold on to their inventory and sell when they find a suitable buyer. For smaller players, who need money immediately to say pay off a loan or pay their employees, the choices are fewer. They, therefore, might offload in the Indian market, at the best price they can command. It is difficult to say exactly at what scale this will happen, but experts believe some textiles, leather goods, etc., will find their way to Indian shops.The job loss fearsStory continues below this adAll of this will definitely mean losses for traders, and compound the existing employment problem.One of the major advantages India enjoys in the export sector is that labour is very cheap here. For Americans, goods imported from India are cheaper than those made in the US significantly because the cost of labour pushes up manufacturing costs there.The availability of cheap labour has meant that manufacturing in India is still not as mechanised as in many other countries. Now, if traders are selling fewer things, they will make fewer things, and thus, a lot of people will find themselves out of jobs.Though this is not a direct link, in the longer term, more people being jobless will mean less spending ability in the Indian market.The way aheadStory continues below this adTraders’ bodies have asked the government for help, including providing loans to cover immediate payment needs. However, one thing complicating the picture is US President Donald Trump’s history of flip-flops. It is difficult to mount long-range solutions for a problem whose nature might change tomorrow.