With the introduction of a 25 per cent US reciprocal tariff, Indian exporters are rushing shipments ahead of the August 27 deadline, when President Donald Trump’s “secondary sanctions” will double customs duties to 50%, media reported.
“We are advancing the shipments and planning to ship goods for the four weeks, instead of a fortnight that we normally do,” said Israr Ahmed, director of Farida Group, which deals in leather and non-leather footwear Similarly, Gurgaon-based Richa Global Exports is working to ensure a large portion of Fall-Winter season orders are shipped to mitigate the impact of
the increased tariffs. “The situation changed yesterday because of the additional 25 per cent tariff. We are trying to ensure that to the extent possible, the work in progress is completed, so that the raw material is not wasted. Given the low margins, we will have to take a hit,” said company head Virender Uppal.
To meet US buyers’ requirements, many exporters have redeployed manpower to advance shipments. Following the 10 per cent tariff imposed in early April, Indian businesses and US buyers arranged to split the 25 per cent tariff burden equally, with sellers offering a 7-8 per cent discount, buyers reducing their margins by a similar amount, and the remainder passed on to consumers.
However, smaller exporters with less bargaining power face greater challenges. Industry leaders express concern over the impending 50 per cent duty.
“This is a huge setback to the labour-intensive apparel export industry. There is no way the industry can absorb this. I am sure the government also realises that this unreasonable increase in tariff will sound the death knell for the micro and medium apparel industry, especially those who majorly sell to the US market, unless the government steps in with direct fiscal support,” said AEPC chairman Sudhir Sekhri.
Describing the situation as catastrophic, Tirupur Exporters’Association president Raja M Shanmugam called for government intervention, warning that exporting to the US is becoming unviable due to low margins. The outlook for gems and jewellery exports is also grim, with companies forecasting a steep decline.
Bankers warn that as much of these exports are on credit, the risk of defaults is rising.