Impact Of US Tariffs On Andhra Pradesh And Telangana

By VBSS Koteswara Rao

India’s FY25 goods exports to the US were $86 billion. The recent imposition of a steep 50% tariff by the United States on a wide range of Indian imports from August 27, 2025, has sent shockwaves across India's export sectors, severely impacting states like Andhra Pradesh and Telangana whose economic growth relies heavily on export-driven industries.

This tariff, the highest imposed by the US on Indian goods, has disrupted traditional trade dynamics, threatening livelihoods and challenging exporters to navigate a new era of uncertainty. Exports of Textiles, Shrimp, leather and gems and jewellery among others are expected to be the worst hit as those of pharmaceuticals, electronics and petroleum products continue to be exempted from tariff.

Impact on Andhra Pradesh's Exportable Products: Andhra Pradesh is a prominent exporter, especially known for seafood such as shrimp and other marine products, which account for over $2.3 billion in annual exports to the US market out of $7.45 billion in 2024-25 fiscal year. These products now face a combined tariff burden that can reach up to 50% when previous duties are considered.

US Tariffs and its impact (ETV Bharat Graphics)

This significant hike threatens small and medium-sized enterprises (MSMEs), seafood processing units, and the larger ecosystem dependent on fishing communities. Agricultural exports such as rice, jaggery, cashew nuts, and processed food products also face pressure due to the reduced competitiveness in the US markets.

The tariff hike reduces profit margins considerably, causing order cancellations, production slowdowns, and risk of job losses in these sectors that form the backbone of Andhra Pradesh’s export economy.

Impact on Telangana's Exportable Products: Telangana's export portfolio to the US is diverse, including pharmaceuticals, organic chemicals, electrical machinery, and aerospace components. While pharmaceutical exports, worth about Rs 36,893 crore, are currently exempt from these new tariffs, other sectors are not as fortunate.

Chemicals, machinery parts, and organic chemicals are now facing increased costs, which might reduce demand in the US market. Telangana’s industrial hubs, including Hyderabad and its environs, risk economic fallout if export orders decline, with potential impacts on employment, especially in manufacturing and allied sectors. The tariff imposition compromises the state's momentum in establishing itself as a key player in global supply chains.

Broader Impacts on Indian Exports: This tariff war exposes Indian exporters to a severe setback, particularly in labor-intensive sectors such as textiles, gems and jewelry, footwear, and furniture, where the US is a primary buyer. The increase from previous 25% tariffs to 50% effectively reduces Indian competitiveness compared to other Asian exporters like Vietnam, Indonesia, and Thailand, which enjoy far lower tariffs.

Early estimates suggest that nearly 60% of India's exports to the US will face this hike, risking up to 70% decline in exports in the affected categories. Consequently, India's GDP growth may slow by up to 0.4-0.7%, centered around job losses in critical MSME-driven export sectors.

Suggestions for the Government: To counteract the adverse effects, the government must pursue multi-faceted strategies: • Immediate roll-out of the Export Promotion Mission, which was announced in the Union Budget. Which can provide vital support in the 2 of 4 areas of export financing, market development, and regulatory compliance, enabling Indian exporters to remain competitive and resilient.

• Emergency Credit Line Guarantee Scheme: ECLGS to provide collateral-free working capital, would ease liquidity pressure and prevent export accounts from slipping into the NPA category

• Diversification of Export Markets: Expanding into other global markets including the UK, EU, Australia, ASEAN countries, and the UAE can reduce reliance on the US market.

• Enhanced Support for MSMEs: Providing liquidity support, export credit guarantees, and enhanced access to Production Linked Incentive (PLI) schemes will help MSMEs mitigate liquidity crunches and invest in modernisation.

• Diplomatic Engagement: Continuing trade talks and diplomatic efforts with the US to negotiate tariff exemptions or reductions for critical sectors can alleviate some pressure.

• Boosting Domestic Manufacturing: Strengthening the domestic industrial ecosystem to reduce import dependency and become a global supplier alternative, especially in electronics and machinery, aligns with the "Make in India" and "China plus One" strategies.

• Promoting Self-Reliance: Encouraging 'Made in India' branding and supporting indigenous products can attract global buyers looking for alternatives to China.

Suggestions for Exporters to the US: Exporters, particularly in Andhra Pradesh and Telangana, must quickly adapt to the evolving trade landscape

• Market Diversification: Identifying and targeting alternative markets beyond the US to balance export portfolios. 3 of 4

• Product Innovation and Value Addition: Improving product quality and shifting focus toward less tariff-sensitive sectors such as engineering, pharmaceuticals and technology-driven products.

• Cost Optimisation: Streamlining operations and supply chains to reduce costs and maintain price competitiveness despite tariffs.

• Collaborate with Government Programs: Leveraging government schemes for financial and technical assistance can increase resilience.

• Strengthen Domestic Demand: Redirecting some exports toward the domestic market while improving competitiveness and consumer acceptance.

Conclusion

The US 50% tariffs on Indian goods represent a significant challenge for export-dependent states like Andhra Pradesh and Telangana. The immediate effects are harsh, with threatened livelihoods and shrinking market opportunities. State Governments also should intervene in helping the respective sectors in each state. Also help the sectors in lobbying with the Centre to get relief for their sectors. Exporter also should focus on diversification, innovation, and efficiency to navigate this tariff war and seek new avenues for sustainable export growth.

This moment also serves as a call for deeper self-reliance and a robust manufacturing ecosystem to withstand global uncertainties and to capitalise on emerging trade relationships worldwide.

(Disclaimer: The opinions expressed in this article are those of the writer. The facts and opinions expressed here do not reflect the views of ETV Bharat)