U.S. TARIFFS IMPACT WOMEN IN LABOUR-INTENSIVE SECTORS

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Picture Courtesy:  THE HINDU

Context

The U.S. imposes tariffs, especially on goods from labor-intensive sectors like textiles and garments, disproportionately harm women workers, who form a majority of the workforce in these industries.

Background

Tariffs and trade tensions: Tariffs are taxes on imports. Recent US policy imposed 50% tariffs on many imports from India. This has increased trade tensions between the US and India.

India–US trade: In 2024 India export about $87 billion of goods to the US. Labour-intensive sectors (textiles, apparel, leather, gems & jewellery, handicrafts, etc.) account for a large share of these exports. 

Why women are most affected? Women form the majority of workers in these labour-intensive industries in India. For example, the textile and apparel sector employs over 45 million people and is India’s second-largest employer after agriculture.

• According to the Handloom Census 2019-20, Women workers are 72.29% of the total handloom workers.
• In apparel manufacturing, about 65% of the workforce is female, and in textiles, nearly half are women. Thus, any shock to exports in these sectors disproportionately hits women’s jobs and income.

Impact of 50% USA tariff on India

Exports decline: The commerce ministry estimates about $48.2 billion of exports will be hit by the new duties. Over half of India’s merchandise exports to the US – roughly 55% of $87 billion – now face a 50% tariff.

• The Global Trade Research Initiative (GTRI) estimates India’s exports to the US could fall from $87 billion in 2024–25 to about $49.6 billion in 2025–26.
• Labour-intensive categories like apparel and textiles, gems and jewellery, leather goods, and carpets will be hardest hit.  

Foreign competition: Bangladesh, Vietnam and Cambodia face lower US tariffs and are already diverting orders from India.

• US retailers (e.g. Gap, Walmart, Zara) are asking their Indian suppliers to absorb tariffs or shifting production.  

Socio-Economic Consequences for Women

In labour-intensive industries, women occupy the lower-skilled, lower-paid positions. For example, 65% in the apparel workforce.

• Many work on short-term or informal contracts. When export orders dry up, women are the first to lose work.

Women spend a larger share of earnings on household essentials, their unemployment can plunge families deeper into hardship/poverty.

• Loss of income by mothers or female breadwinners can undermine children’s nutrition and education.
• Many women are sole or primary earners, a sudden collapse in orders would force some back into poverty/inferior local jobs, worsening gender disparities in earnings and empowerment.

Economic independence is directly linked to women's decision-making power within the household.

• Widespread job losses can lead to a resurgence of patriarchal norms, increased incidence of domestic violence (linked to household financial stress), and a spike in early marriages as families view daughters as an economic burden again.  

The Institute for Economics and Peace warns that trade liberalization shocks tend to widen gender gaps, because women have less access to resources like credit and retraining.

Government Initiatives to mitigate the impact

Export incentives and financial support: The Commerce Ministry says exporters hit by tariffs would receive financial assistance and be encouraged to diversify to markets such as China, Latin America and the Middle East.

Export Promotion Mission: A proposed ₹25,000-crore Export Promotion Mission is under consideration, expected to include trade finance, regulatory support, standards alignment, and "Brand India" promotion.

Tax and domestic market measures: To boost internal demand and ease costs, government announced reducing GST rates, and is also considering selective excise/customs reductions on key inputs.

Diversifying markets: Negotiations with the EU and Central Asia have been accelerated, and talks with ASEAN, Latin America and Africa are being prioritized, to reduce over-reliance on the US market.

Industry schemes: Promoting ‘Make in India’, Atmanirbhar Bharat, Production-Linked Incentive (PLI) scheme to strengthen supply chains.

Pradhan Mantri Viksit Bharat Rojgar Yojana (PMVBRY): Announced in August 2025, offers a financial incentive of ₹15,000 to young individuals securing private sector jobs for the first time. Employers hiring under the scheme will also receive benefits to encourage large-scale employment.

Diplomatic action: India publicly criticized the tariffs as “unfair” and has held rounds of talks with US officials. However, as of now, India is avoiding escalation and instead focusing on relief measures at home.

India's Push for Rupee Trade Settlement: India has officially invited BRICS and other partner countries to settle trade in rupees.

• RBI allowed Indian banks to open Special Rupee Vostro Accounts (SRVAs) for correspondent banks of partner countries without prior central bank approval, facilitating rupee-denominated trade transactions.

Way Forward to limit the damage and protect vulnerable workers

Speed up market diversification: Accelerate free-trade negotiations (e.g. with EU, and regional blocs) to access new markets, would help absorb some displaced exports.

• Export promotion councils should actively market Indian textiles and leather to Africa, Latin America and Middle East.

Strengthen domestic industry resilience: Provide unemployment benefits or special allowances to laid-off garment and leather workers could ease hardship.

• Expand MGNREGA work in textile-producing regions.
• For women specifically, scaling up skill training (e.g. stitching, designing, IT) via schemes like PMKVY or Recognition of Prior Learning can help transition women to new jobs.
• Supporting women entrepreneurs in textiles (through startup funding, incubators for women-led design houses) would build resilience.

Financial relief for exporters: Immediate measures like interest subvention on export loans, or cash transfers for women-dependent households in export sectors should be rolled out.

Inclusive policy design: Future trade and industrial policies should be “gender-responsive.” For example, offering special incentives for factories that retain female workers, or requiring buyer companies to share tariff burdens rather than removing workers.

Long-term economic reforms: Use this crisis to accelerate broader reforms. For example, simplifying labour laws to increase formal employment), and easing land and power policies to lower production costs.

• Investing in technology and higher-value segments (like technical textiles, organic food processing) would reduce over-dependence on low-margin exports.

Multilateral engagement: Join other affected countries in multilateral forums to push for WTO reform on trade and tariffs. Collaborative dialogue (e.g. through the upcoming G20 summit in November 2025) to de-escalate and set global norms against  tariff hikes.

By adopting these steps, India can soften the immediate impact on women workers and build a more diversified, equitable export economy. Protecting women’s jobs in the labour-intensive sectors is not only a social priority, but also essential for supporting export-driven growth.

Source: THE HINDU