A Complex and Shifting Trade Landscape
The phrase 'bilateral tariff scrutiny' covers a range of recent trade developments between the US and India. A major point of tension has been the 'Lindsey O. Graham Sanctioning Russia and Iran Act of 2026'. This act threatened tariffs of up to 100% on goods
from countries that are major buyers of Russian oil, a category that includes India. While US President Donald Trump recently issued a waiver, temporarily pausing these punitive tariffs, the relief is not permanent and can be withdrawn. This has left Indian exporters in a state of uncertainty. Compounding this, India has not been part of the US Generalized System of Preferences (GSP) since 2019. The GSP program allows certain goods from developing countries to enter the US duty-free, and its absence puts some Indian products at a price disadvantage compared to competitors from other nations.
Why Handicrafts Are So Important
The United States is the single largest market for Indian handicrafts, accounting for nearly 39% of the sector's total exports. In the 2026 fiscal year, India's handicraft exports, excluding carpets, reached over $3.78 billion, demonstrating strong global demand. This industry is not just about numbers; it is the backbone of many rural economies and a significant source of employment, particularly for women. The sector employs over seven million artisans across hundreds of craft clusters, producing a diverse range of goods from woodware and metal wares to hand-printed textiles, embroidered goods, and imitation jewellery. These products, celebrated for being sustainable and culturally rich, have found a strong footing in the American market.
The Ripple Effect on Artisans
For the millions of artisans whose livelihoods depend on this trade, tariff uncertainty has immediate consequences. An embroiderer in Lucknow or a Pashmina weaver in Srinagar may not follow the intricacies of Washington's trade policy, but they feel its effects directly. When US buyers become hesitant due to potential price hikes from tariffs, they postpone or reduce orders. This slowdown travels down the supply chain, from the exporter in a major city to the craftsperson in a village. As one artisan noted, when an exporter doesn't get orders, they don't place new ones, and livelihoods can dry up. The uncertainty makes it difficult for small enterprises to price contracts and manage their finances, hindering their ability to build the stable, long-term customer relationships they need to thrive.
A Glimmer of Hope: An Emerging Trade Deal
Amidst the challenges, there is a potential silver lining. India and the US are reportedly 'very, very close' to finalizing a bilateral trade agreement. According to statements from Commerce Minister Piyush Goyal and US officials, this deal could offer preferential tariff treatment for certain Indian products, with home décor and handicrafts mentioned as a key category. In February 2026, the US announced a framework for a deal that would lower a 'Reciprocal Tariff' on Indian goods. Such an agreement could provide Indian exporters with better pricing, making their products more competitive against suppliers from other countries. It could also bring much-needed predictability to the trade relationship, allowing businesses, including smaller handicraft manufacturers, to plan for the future with more confidence.
