US Tariffs and Turmoil: Why the Common Man Pays for Global Power Plays

Section 1: Introduction - US Tariffs

The phone call came just after lunch. Ramandeep Singh, owner of a mid-sized garment export unit in Gurgaon, had been anxiously waiting to hear back from a major U.S. buyer. When the voice on the other end finally spoke, it wasn’t good news.

“Ramandeep ji, we can’t absorb the new tariffs,” the buyer said flatly. “If you want to keep the order, you’ll have to share the cost — at least 20 to 30%.”

For Singh, whose factory employs 120 workers, mostly women from nearby villages, this wasn’t just about margins — it was about survival. Within a week, two standing orders were cancelled outright, and production lines slowed to a crawl. Looming in the background was the unspoken fear: how long before wage payments are delayed, or worse, pink slips start replacing pay checks?

This is not an isolated story. Across India’s garment hubs — Tiruppur, Ludhiana, Noida, and Surat — thousands of MSME exporters are facing the harsh reality of 50% U.S. tariffs, coupled with rising oil-driven logistics costs. What began as a geopolitical tug-of-war over Russian crude has now cascaded into economic uncertainty and emotional strain for businesses and workers who had no stake in the policy game being played in Washington.

US tariffs

Section 2: When Policy Becomes Personal – The Ripple Effect

For India’s garment and textile exporters, the impact of the U.S. tariffs is not just a statistic on trade balance sheets — it’s a daily crisis unfolding in shop floors and small-town households.

In Tiruppur, the knitwear capital that ships billions of dollars’ worth of T-shirts and sportswear each year, factory owners describe a scene of anxious huddles around order sheets. One exporter summed it up bluntly:

“Margins were already wafer-thin. With 50% tariffs and higher shipping costs because of rising oil prices, we’re now working at a loss just to retain clients.”

Across hubs like Noida and Ludhiana, the story repeats. Order cancellations are common, and where deals survive, U.S. buyers are leveraging their position to demand steep discounts, sometimes as high as 25–30%, to offset their own costs.

For the common worker, this translates into shorter shifts, delayed overtime, and, in many cases, uncertainty about next month’s salary. In some units, production lines that once buzzed through the night have fallen silent. Small-town economies that depend on these units — tea stalls, transporters, and packaging vendors — are beginning to feel the pinch too.

Double Pressure: Oil and Tariffs

The tariff shock is compounded by a parallel spike in operational costs.

• Transport and logistics: Diesel prices, already sensitive to global crude rates, have inched upward, raising freight bills domestically and internationally.

• Raw materials: Synthetic fibers and dyes, derived from petroleum products, are now significantly costlier, eating into already narrow margins.

• Power costs: In clusters where outages are frequent, running backup generators on diesel is eroding profitability further.

  
  

MSMEs – The Weakest Link

Unlike large export houses that can hedge currency or absorb temporary shocks, most MSMEs lack financial buffers. Working capital loans are harder to service as cash flows tighten. According to CRISIL, nearly 25% of India’s textile exports could be at risk over the next six months, with smaller exporters carrying the heaviest burden.

One cluster association in Tiruppur estimates that up to 30% of smaller units could face closure or severe downsizing if the situation persists through the festive season.

Section 3: The Chessboard of Global Oil and Trade

What’s happening with India’s garment sector — and MSMEs at large — isn’t happening in isolation. It’s part of a high-stakes game of geopolitical chess, where every move is strategic, every counter-move deliberate, and every square on the board carries real consequences for ordinary people and businesses back home.

1. The U.S. — Playing Hardball

The U.S., under the Trump administration, is using tariffs as leverage. By doubling tariffs to 50% on Indian goods, Washington is signaling that India must choose between energy security with Russia and trade stability with the U.S.

• Strategic Objective: Curb Russia’s revenue from discounted crude, which Washington argues is fueling the Ukraine war.

• Tactics: Tariffs as a bargaining chip — with Peter Navarro publicly offering a rollback of the additional 25% if India stops buying Russian oil.

• Domestic Lens: Tariffs also cater to Trump’s electoral base by projecting strength and protecting U.S. manufacturing, despite pushback from American businesses worried about rising input costs.

  
  

For Indian exporters, this “hardball” strategy translates into vanishing competitiveness in their largest market, forcing them to either slash margins or risk losing contracts altogether.

2. India — The Balancing Act

India’s position is complex — a tightrope walk between diplomacy, energy security, and economic stability.

• Energy Imperative: With over 85% of crude imported, and Russian discounts saving billions of dollars annually, cutting off Russian oil isn’t a realistic short-term option.

• Trade Pressure: The U.S. is India’s largest export destination for garments, textiles, jewelry, and IT services, making tariffs a significant pain point.

• Domestic Cushioning: New Delhi is:

  • Extending cotton import duty exemptions till December to help textile MSMEs.

  • Exploring new export markets in the EU, ASEAN, and the Middle East.

  • Considering fiscal support and export incentives to stabilize clusters like Tiruppur and Surat.

This is a defensive strategy — holding ground without alienating either the U.S. or Russia, while keeping a close eye on inflationary pressures at home.

3. Russia — Quiet but Calculated

Russia, for its part, continues to leverage its discounted crude diplomacy to maintain export volumes and geopolitical alliances.

• Strategic Objective: Keep oil flowing to non-Western buyers like India and China to sustain revenue streams despite Western sanctions.

• Tactics: Attractive discounts, flexible payment terms, and even support in setting up rupee-based trade mechanisms.

• Impact on India: These deals have helped India keep pump prices relatively stable, even as global crude markets remained volatile — providing a vital buffer for both consumers and MSMEs.

  
  

4. China — Watching, Waiting, Advancing

China has been quietly capitalizing on the rift between the U.S. and India.

• Strategic Objective: Strengthen trade ties with India while deepening its influence in BRICS and the Shanghai Cooperation Organisation (SCO).

• Tactics:

  • Offering supply chain alternatives in raw materials and logistics.

  • Positioning itself as a dependable trade partner amid U.S. uncertainty.

• Impact on India: This creates opportunities for cheaper imports in key manufacturing inputs, but also raises concerns about deeper dependency on Chinese supply chains — a sensitive issue given the history of border clashes and trade imbalances.

  
  

Government and Industry Response

Data-Driven Realities

• According to CRISIL, the garments and textiles sector alone risks losing up to $8 billion in export revenue over the next 12 months if tariffs persist.

  
  

• The Tiruppur Exporters’ Association estimates 20–30% of MSMEs in the cluster are already at risk of closure without immediate fiscal relief.

  
  

• Small Industries Development Bank of India (SIDBI) is receiving increased requests for restructuring working capital loans from export-driven MSMEs in high-impact clusters.

  
  

Policy Counter-Moves

• Export Diversification: The government is urging exporters to expand in Europe, Latin America, and Africa to offset U.S. losses.

  
  

• Financial Relief: Extensions on cotton import duty exemptions and talks of interest subvention schemes for exporters are in progress.

  
  

• Diplomatic Channels: High-level talks with Washington continue, signaling India’s openness to dialogue but firm stand on balancing energy needs.

The Surface: Concerns Over Russian War Funding

Yes, the U.S. explicitly ties its additional 25% tariff (on top of an earlier 25% reciprocal levy) to India's continued purchases of discounted Russian oil. Officials like Peter Navarro have framed this shift as directly financing Moscow’s aggression in Ukraine:

• He goes as far as calling the war “Modi’s war,” suggesting Indian oil purchases help sustain Russia’s military and, by extension, burden American taxpayers, who must compensate Ukraine militarily.

  
  

That’s the official narrative: reducing Russian oil revenue helps squeeze its war machine.

But That’s Not All — The Real Game Isn’t Just Oil

Beyond energy policy, the tariffs reflect broader U.S. strategic calculations:

• Rebalancing Trade Against India

The 25% “reciprocal tariff” (imposed on August 7) reflects a long-standing U.S. concern over India’s high import duties and an uneven trade relationship. It isn’t just about energy — it’s also about correcting trade imbalances.

• Diplomacy via Tariffs as Leverage

Kenneth Juster (former U.S. ambassador to India) interprets the measures as negotiation tools. Tariffs are the lever to open Indian markets further and maybe even push New Delhi to advocate for peace in Ukraine.

• Straining a Strategic Partnership

Evan Feigenbaum of the Carnegie Endowment calls the move a blunt instrument that risks undoing decades of progress in U.S.–India relations. Coercive tariffs send a message that strategic allies can be punished, potentially weakening trust 

• Strategic Diversion — The Indo-Pacific Calculus

By putting pressure on India, the U.S. may be signaling displeasure with India’s independent foreign policy trajectory, including its outreach to Russia, China, and participation in blocs like BRICS and SCO Carnegie Endowment

• Domestic Political Theater

Tariffs are also domestic political cargo — demonstrating a tough-on-global-trade posture appealing to populist bases, regardless of diplomatic cost.

So, What Is the Real U.S. Problem?

Let’s break it down:

Stated Cause	Underlying Motives
Funding Russia's war via oil revenue	Rebalancing trade with India, leveraging tariffs for broader economic negotiations, safeguarding domestic political interests, and signaling displeasure with India’s strategic autonomy.

In essence, the U.S. is wrestling with both economic and geopolitical anxieties:

• A tactical urge to curb Russian war funding,

• A strategic bid to rebalance trade terms and reassert influence over an increasingly independent partner,

• And a diplomatic backlash to India’s refusal to align fully with U.S. policy goals.

The Bottom Line

The oil issue is the excuse—but not the whole story. What’s really at stake is U.S. frustration over shifting alliances, India’s strategic autonomy, and the erosion of a predictable partnership. Tariffs are less about oil and more about power, leverage, and diplomacy.

Section 4: Endgame — Finding Balance Amid the Chaos

On the global chessboard, every move is deliberate. The U.S. wields tariffs like a rook — direct, heavy, and positional. India counters like a cautious knight, sidestepping to protect its energy security while quietly exploring new markets. Russia, with its queen-like agility, shifts barrels and discounts to sustain revenue, while China lurks like a bishop on the diagonal, silently advancing influence through trade and strategic alignment.

But away from these grand strategies, on the factory floors of Tiruppur, Ludhiana, and Noida, the game feels far less abstract. Here, every cancelled order means an empty loom, every cost hike means delayed wages, and every rumble in Washington or Moscow sends ripples through the narrow lanes where small businesses keep entire communities afloat.

Best-Case Scenario

Diplomacy prevails. India continues to engage with Washington while maintaining access to discounted Russian crude. Tariffs ease — even partially — and MSMEs regain competitiveness in the U.S. market, buying time to diversify their export base and adapt to shifting cost structures.

Worst-Case Scenario

The standoff escalates. Tariffs stay high or rise further, oil prices climb, and small exporters — already stretched — face closures. Job losses in clusters like Tiruppur could run into tens of thousands, triggering wider social and economic distress.

The Strategic Middle Path

For India, the middle path is clear but difficult:

• Diplomatic Engagement: Keep dialogue open with the U.S. while reinforcing strategic autonomy.

• Market Diversification: Invest aggressively in tapping the EU, ASEAN, Africa, and Latin America to reduce U.S. dependence.

• Support for MSMEs: Expand credit lines, ease compliance burdens, and provide direct relief in high-risk clusters.

• Energy Transition: Accelerate the shift toward renewables, green hydrogen, and EV adoption to reduce oil vulnerability over the long term.

Final Reflection

In the end, this isn’t just a story of trade and tariffs. It’s about resilience — of entrepreneurs who adapt, workers who persevere, and a nation navigating its place in a fractured world.

Because for India’s common man and its MSMEs, the message is clear: global games are played at high tables, but the cost is paid in every litre at the pump, every metre of fabric left unsold, and every family budgeting for one more uncertain month.