NEW DELHI: With US President Donald Trump imposing reciprocal tariffs, Indian exporters are preparing for a turbulent start to the new financial year. Many anticipate significant disruptions, particularly in the first quarter, as American buyers reassess costs and orders.
Already, exporters of engineering goods, particularly those dealing in iron, steel, and aluminum products, are seeing immediate consequences. Nearly $5 billion worth of shipments currently in transit have been hit by a 25% additional tariff. Pankaj Chadha, chairman of EEPC India, noted that pending orders are now on hold as US buyers await price adjustments. “American buyers are waiting for revised prices, which has stalled trade flows,” said Chadha, who is currently in Europe scouting for new stainless steel buyers.
Leather and Apparel Exporters Face Margin Squeeze
India’s leather industry is also bracing for the fallout. If Trump introduces sector-specific tariffs on Indian goods, exporters fear significant losses. M. Rafeeque Ahmed, chairman of Farida Group, one of India’s largest leather and footwear exporters, explained the challenge:
“If there is a blanket tariff increase, the impact will be manageable. However, if Indian goods face disproportionately higher duties, buyers may refuse to share the burden, squeezing our margins.”
With 15,000 of his 20,000 factory workers producing for the US market, Ahmed acknowledged the potential strain on his operations.
Apparel exporters are already seeing US buyers demand discounts in anticipation of higher tariffs on Indian goods. Mithileshwar Thakur, secretary general of the Apparel Export Promotion Council, expressed concern:
“The looming threat of US tariffs is deeply worrying for Indian apparel exporters. We remain hopeful that proactive engagement by the Indian government might delay these tariffs. However, given the uncertainty in bilateral trade, it is critical that we aggressively pursue market diversification.”
Some Buyers Willing to Share the Cost
While some exporters fear losses, others have successfully negotiated burden-sharing agreements with American partners. Ajay Sahai, Director General and CEO of FIEO, highlighted that many US buyers understand the challenges and have agreed to split the additional costs with Indian suppliers.
“Strong trade partnerships are ensuring seamless supply chains, despite the tariff disruptions,” Sahai stated.
As India navigates these trade tensions, exporters are pushing for government intervention while simultaneously seeking alternative markets to reduce dependence on the US.
