Textile hub on the brink: Trump tariffs could cost Tamil Nadu $3.93 billion

Tamil Nadu stands to lose an estimated $3.93 billion following the Trump administration's imposition of a 50 per cent tariff on Indian exports to the United States, Chief Minister M.K. Stalin has warned, calling the tariff hike an "unprecedented" blow to the state’s economy.

The new duties, which came into effect on August 27, have triggered widespread concern among exporters across Tamil Nadu, where the US has long been the dominant export market. In the last fiscal year, 31 per cent of the state's merchandise exports went to the US-far higher than the national average of 20 per cent. 

The steep tariff hike has already led to cancellations of orders and rendered Tamil Nadu's exports uncompetitive, particularly in key sectors such as textiles, machinery, gems and jewellery, and auto components.

Stalin said the projected losses extend far beyond trade value, with job losses ranging from 13 per cent to 36 per cent across affected industries. "The impact of US tariffs on the textiles sector is the most worrying," he stated. Guidance Tamil Nadu estimates that the textiles sector alone could suffer a $1.62 billion hit.

Tamil Nadu contributes 28 per cent of India's textile exports -the highest among all states - and the sector is a critical economic pillar, sustaining millions of families. In Tiruppur district, where women comprise 65 per cent of the textile workforce, the industry earned Rs 40,000 crore in foreign exchange last year. The sector also supports a broader ecosystem of dyeing, logistics, packaging and machinery industries.

Stalin reiterated his August 16 appeal to the Prime Minister for urgent intervention, including a special relief package, GST corrections on man-made fibre, collateral-free credit under the ECLGS, and enhancements to the RoDTEP scheme. He further urged the Union to accelerate free trade agreements and bilateral trade deals with the EU, UK, and Africa to counterbalance the loss of competitiveness in the US market.

Despite the challenges, the chief minister highlighted Tamil Nadu's independent policy initiatives, including the recently announced Capital Investment Subsidy for Zero Liquid Discharge-based textile processing units. The state has also launched the Tamil Nadu Technical Textile Mission and introduced schemes to support technical textiles and man-made fibre manufacturing. These efforts aim to future-proof the industry and align it with global sustainability and compliance standards.

Stalin acknowledged the temporary suspension of the 11 per cent Customs duty on cotton imports until December 31 as a positive step, but emphasised that it addressed only a small part of the broader crisis. "Unless tariffs are rolled back or offset through other incentives, the relief will be short-lived," he said.