Donald Trump's Tariffs: Will Indian Engineers In US Lose Jobs?

Donald Trump's Tariffs: US President Donald Trump has introduced the steepest American tariffs in a century, intensifying the ongoing trade war and causing global economic tremors. These tariffs, including a minimum 10% tax on all exports and even higher rates for 60 countries, are aimed at addressing what Trump calls unfair trade imbalances.

India, a major exporter, is one of the hardest-hit nations, facing a 26% tariff on its exports to the US.

The tariffs primarily target manufacturing and merchandise trade, but concerns are rising about the potential impact on India’s significant IT sector and its engineers working in the US.

Indian IT Industry Crucial Part Of Global Economy

The Indian IT industry has been a crucial part of the global economy. According to IBEF data, the export of IT services has been the major contributor, accounting for more than 53% of total IT exports (including hardware). For the software services and the IT sector of India, the USA, Europe, and the UK are the top importers accounting for about 55%, 14%, and 17% of the total IT-ITeS exports, respectively. 

The total value of Indian IT exports in FY23 stood at $194 billion, with the US, UK, and Japan being the largest importers of these services. The US alone imported $103.9 billion worth of Indian software services in 2022-23.

Indian IT Jobs In Foray?

The IT industry added 2.9 lakh new positions, bringing the total workforce to 5.4 million in FY23.  

Despite the significant impact on India's merchandise exports, industry experts believe that the IT sector may not face immediate repercussions.

Rahul Ahluwalia, Founding Director of the Federation of Economic Development, told Republic Business, "As of now, the IT sector isn't being targeted by these tariffs. These are focused on manufacturing. While Trump has previously criticized immigration and the influx of foreign workers, the current tariffs seem to focus on merchandise, not services. So, for now, I don’t foresee an immediate impact on services."

Although Indian IT professionals in the US may not face layoffs right away, broader policy shifts could lead to changes in hiring practices and visa policies.

Saket Dalmia, former President of the PHD Chamber of Commerce and Industries, commented, "Indian IT jobs in the US may face short-term disruptions due to supply-demand dynamics. However, this is likely to be a temporary effect, as Indian talent will adapt and regain its position in the global workforce. Remote work opportunities could also rise, allowing Indian tech professionals to work from home and tap into US-based projects."

Indian IT Industry Future

The Indian IT industry is projected to reach $350 billion by 2026, contributing 10% to India’s GDP. 

Furthermore, the increasing adoption of cloud technology could create 14 million jobs and contribute Rs. 33,01,060 crore ($380 billion) to India’s GDP by 2026. 

India’s data annotation market, valued at $250 million in FY20, is expected to reach $7 billion by 2030.