NEW DELHI: As businesses brace for Trump’s reciprocal tariffs, there is palpable tension with exporters expecting turbulence at least during the first quarter of the new financial year.
Already, engineering goods exporters, dealing in iron and steel and aluminium products, are facing a hit on $5 billion of shipments in transit as US president Donald Trump imposed a 25% additional levy. “Pending orders are on hold as American buyers are waiting for price adjustments,” said Pankaj Chadha, chairman of EEPC India, who is in Europe, seeking to identify new buyers for his company’s stainless steel products.
Leather goods exporters too are staring at their margins shrinking, in case Trump announces reciprocal tariffs on Indian goods. “We will not be so badly hit if there is an across-the-board increase, but if Indian goods face higher duties then there will be some impact and buyers may not be willing to adjust prices for us or share the burden,” said M Rafeeque Ahmed, who runs Farida group, one of the largest leather goods and footwear exporters. He said that with 15,000 of the 20,000 workers at his factories catering to the US markets, there may be some impact on his business.
Anticipating higher tariffs on Indian goods, some of the American garment buyers have been demanding that Indian exporters offer discounts, an issue that has also been flagged to govt. “With the threat of reciprocal tariff by the US looming large, Indian apparel exporters are deeply concerned about the adverse impact it can have on the apparel trade with US. We are though quite hopeful that with pro-active engagement of Indian govt, the application of reciprocal tariff on India may be deferred. However, given the uncertainty surrounding bilateral trade with US, it is high time we prioritise market diversification with all seriousness,” said Mithileshwar Thakur, secretary general of the Apparel Export Promotion Council.
There are some buyers who are, however, willing to share the higher burden. “Many US buyers and Indian suppliers have already reached mutual agreements to share any tariff impact, reinforcing strong trade partnerships and ensuring seamless supply chains,” said Ajay Sahai, director general and CEO of industry body Fieo.