Trump’s 50% Tariff Puts Indian Footwear Industry in Jeopardy

In Agra’s sprawling footwear factories, workers move in sync along buzzing assembly lines, brushing, stitching, and heat-sealing leather in a routine perfected over the years. These shoes, once destined for store shelves in Europe and an emerging US market, now face an uncertain future.

US President Donald Trump’s recent decision to raise tariffs on Indian leather footwear, from 5–8% to 25%, with another 25% hike threatened by August 27, has hit the industry at a crucial moment.

India’s leather exports have been steadily climbing, from $3.68 billion in 2020–21 to $4.82 billion in 2024–25. Sales to the US surged 62% in the same period, giving Indian exporters hope of making inroads into the world’s biggest consumer market.

“There will definitely be an impact. We only have three US-based customers, as most of Agra’s exports have traditionally gone to Europe. But the US was a major market we were trying to enter. It’s a huge consumer base, and any success there would have changed the scale of our business. This is going to slow that push down,” said Sushant Dhapodkar of Tej International Pvt Ltd.

Agra, along with Kolkata, Kanpur, and Chennai, forms the backbone of India’s leather footwear production. The city alone has over 10,000 micro-units and hundreds of larger factories, many of which recently expanded to meet rising US demand.

“Those who were earlier working on six assembly lines are now running 14,” said Puran Dawar, chairman of the Development Council for Footwear and Leather Industry and president of the Agra Footwear Manufacturers and Exporters Chamber. “We ourselves had set up a unit bigger than our existing one to tap into the US market. That’s definitely out of the question now.”

The announcement comes at the busiest time of year, the production peak for autumn and winter collections. Orders already in final stages or ready to ship are now on hold.

Some American buyers, Dawar said, are asking manufacturers to share the tariff cost: “This is the peak season for autumn and winter orders, and buyers are already telling us to hold shipments, even for goods ready to go. They want us to share the tariff loss. But the US is a price-sensitive market, nobody can afford to share even 12.5% of the burden, let alone 50%. Some buyers have already cancelled and are looking to China because their tariff is 30%, and to Vietnam, where it’s just 20%. We can’t compete at those rates.”

Nazir Ahmed of Park Exports warns the impact could extend beyond exports. “Now with the initial 25%, it’s going to be a disaster unless Trump goes back to the original tariff,” he said.

“This won’t just be a problem for India, but for the US as well… the higher the duty, the more expensive their product will be. In countries where lower tariffs are imposed, they will have the advantage, and we wouldn’t be able to compete with them. If orders aren’t placed, factories will be without work. And if factories are without work, workers will be without work. This industry is labour-intensive, so unemployment could run into millions if this continues. And I’m not just talking about manufacturing: textiles, tools, every industry linked to this process will take a hit.”

Some in the industry believe the hike is a “pressure tactic” and hope it will be rolled back. Exporters recently met Commerce Minister Piyush Goyal to discuss relief, including the possibility of the government covering part of the tariff hike.

But the ripple effects are already being felt outside Agra. In Kanpur, tannery owner Naseem Khan says orders are being cancelled mid-production. “Whatever the stage of production, they’re saying stop immediately. Even though we don’t directly export to the US, we are deeply connected; the leather we produce is approved by those who manufacture finished goods for the US.”

Exporters are now considering alternative markets such as Russia and Chile, and some are even turning towards India’s growing middle-class consumers.

“Currently, the dispatches have come to a standstill. All US buyers and Indian manufacturers exporting finished goods to the US have put their orders on pause because of the 50% tax,” said Rajendra Kumar Jalan, chairman of the Council for Leather Export.

“When the tax was raised to 25%, there was still some hope, we were still on par with competing nations like Bangladesh, Indonesia, Vietnam, and, to some extent, China. But now, we are completely out of the picture. China, in fact, is gaining an advantage because the additional Russian oil tariffs do not apply to them, and they also enjoy a 90-day moratorium. That being said, the US purchases from us are in large volumes, and for these bulk buyers, getting an alternative source of production for these huge orders, and that too in a short period, will be extremely difficult," he said.

"At present, the reaction is one of panic. But we remain hopeful of finding alternative markets. There will be competition from other leather manufacturing nations, but our focus will be on countries where India has signed or is about to sign an FTA, countries such as Chile, Peru, and some European nations," Jalan added.

Also Read: "Trump's Tariff War on India": How Does PM Modi Respond?