Trump's 50% tariff kicks in today, Indian exporters bracing for tough times

As an additional 25% tariff on Indian-origin goods announced by US President Donald Trump kicks in today, the Federation of Indian Export Organisations (FIEO) has expressed grave concern over total duties on many export categories rising to 50% and turning those products uncompetitive in the US market.

The move will severely disrupt the flow of Indian goods to its largest export market and approximately 55% of India’s US-bound shipments (worth $47–48 billion) are now exposed to pricing disadvantages of 30–35%, S C Ralhan, president, FIEO, said. Trump tariffs will render these goods uncompetitive in comparison to its competitors from China, Vietnam, Cambodia, the Philippines and other Southeast and South Asian countries, he added.

According to Ralhan, textiles and apparel manufacturers in Tirupur, Noida, and Surat have halted production amid worsening cost competitiveness and the sector is losing ground to lower‑cost rivals from Vietnam and Bangladesh. While for the seafood, especially shrimps, as the US market absorbs nearly 40% of Indian seafood exports and the tariff increase risks stockpile losses, disrupted supply chains, and farmer distress, he explained.

FIEO said other labour-intensive sectors of exports like leather, ceramics, chemicals, handicrafts, carpets etc, also face a sharp erosion of competitiveness, particularly against European, South East and Mexican producers. Delays, order cancellations, and negated cost advantages loom large on these sectors, the organisation pointed out.

Ralhan called for immediate government support, including push for interest subvention schemes and export credit support to sustain working capital and liquidity. To further support this, low cost of credit and easy availability of credit with emphasis on MSMEs with the support from banks and financial institutions with special direction in this regard both from the Govt and the Reserve Bank of India is needed, he said.

FIEO has also sought a moratorium on payment of principal and interest for loans up to a period of 1 year for exporters. Additionally, automatic enhancement of the existing limit by 30% along with collateral free lending on ECLGS lines may also be pushed as these will help in addressing the stress of these companies without much burden on the exchequer, the organisation said.