Trump tariff hike on Indian exports pushes exporters to frontload shipments as US trade tensions intensify with India.
US President Donald Trump’s aggressive tariff hike on Indian exports has triggered a rush among exporters to ship consignments early. Trump imposed a 25 per cent reciprocal duty and warned of another 25 per cent penalty linked to India’s oil trade with Russia. As a result, Indian exports to the US rose at a pace far higher than overall trade between April and July. Exporters frontloaded shipments before the deadlines, creating both short-term gains and long-term risks.
Commerce department data showed exports to the US expanded seven times faster than overall exports. Shipments to the US grew 21 per cent to $33.5 billion during April–July. In comparison, overall exports increased just 3 per cent to $149.2 billion. Exporters rushed in April to beat the first tariff. A similar push is now evident ahead of the 27 August deadline for the next levy.
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The US accounted for 22 per cent of India’s shipments in this period. This has left exporters more exposed to risks of a potential 50 per cent duty. Despite the surge, vulnerability remains high. Some exporters offered discounts to buyers because of the temporary cushion created by frontloaded shipments.
Exporters managed to absorb the first 25 per cent duty by sharing costs with buyers and expediting consignments. For the next round, some contracts now state that discounts will not apply if Washington lifts the levy. Sudhir Sekhri, chairman of the Apparel Export Promotion Council, said that although official negotiations with the US scheduled for August 25 have been postponed, a breakthrough is expected in the coming weeks.
Industry leaders warned that an additional 25 per cent tariff would push total duties to 50 per cent. Rajendra Kumar Jalan, chairman of the Council for Leather Exports, said exporters operate on very thin margins of 5–7 per cent. He added that companies can sacrifice profits but cannot sustain losses. Jalan noted that ongoing US-Russia talks offered a ray of hope that the additional penalty may not be enforced.
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Indian exporters face a crucial test. The Trump tariff hike created a short-term boost in shipments but threatens long-term stability and exporters continue to hope that trade talks will soften the blow before duties escalate further.
