Donald Trump tariffs: Indian exporters on edge as move sparks cancellations; US buyers hold orders

Time of India

4 days ago

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Exporters across sectors are worried after US President Donald Trump declared a 25 per cent tariff on Indian goods from August 1, along with an unspecified penalty linked to India's purchases of Russian crude oil and military equipment.
The announcement has led to immediate jitters in trade circles, with many buyers from the US holding or cancelling orders as they await more clarity.
'I have started receiving communication from my buyers for cancellation of orders. We are a bit worried,' said S C Ralhan, president of the Federation of Indian Export Organisations (FIEO) and a hand tool exporter from Ludhiana, as quoted by news agency PTI. He added that the industry is waiting for the US executive order to understand the full scope of the tariff and penalty terms.
A major point of concern is the unspecified penalty component. 'If it will be imposed in addition to the 25 per cent, then buyers will stop placing orders,' said Arvind Goenka, a plastic product exporter, as per PTI.
A leather and footwear exporter also warned that nearly 60 per cent of orders could be cancelled if the tariffs are implemented from August 1. 'US buyers are waiting for clarity. It is creating uncertainty,' the exporter said.
The US is India's largest trading partner and accounted for about 18 per cent of total exports in 2024-25. The two-way trade reached $186 billion that year, with India recording a total goods and services trade surplus of $44.4 billion.
Exporters argue that India's competitors such as Vietnam and Indonesia currently face lower import duties in the US, 20% and 19%, respectively, giving them a clear pricing advantage.
'We will be seriously impacted,' said Chandrima Chatterjee, secretary general of the Confederation of Indian Textile Industry (CITI). 'While most of us have taken the 25 per cent tariff with a pinch of salt, the penalty is where we are extremely concerned', Chatterjee added.
According to Cybex Exim Solutions, Indian textile and garment exporters, who send about $5.6 billion worth of ready-made garments to the US annually, will be among the hardest hit.
'The 25 per cent tariff is a big blow. Many exporters might face order cancellations or pressure to reduce prices. Countries like Vietnam and Indonesia now have a pricing edge,' it said.
The industry is hopeful that India and the US will soon finalise an interim trade deal to remove or ease the imposed tariff and penalty.
Until then, businesses remain in limbo, trying to navigate through cost pressures, buyer hesitations, and trade uncertainty.
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