Exporters to U.S. fear loss of business with 25% additional tariff

The additional 25% tariff announced by the U.S. on exports from India will result in loss of substantial business if the tariff stays, said exporters of engineering and textile products.

The U.S. is the top market for several Indian products. Exporters hope the U.S. will withdraw the additional tariff and have called for efforts to continue negotiations between the two countries.

While support from the government cannot be a substitute for export orders, the exporters do need financial support from the Union government to overcome the current situation as Indian exporters are in trouble, said an engineering exporter.

In 2024-2025, the U.S. accounted for 27% of the $22.9 billion auto components exported from India and 7% of $22.4 billion imports of auto components into India, said Automotive Component Manufacturers Association president Shradha Suri Marwah.

“While this [additional tariff] development presents near term headwinds, for Indian exporters, it also underscores the importance of enhancing our sector’s competitiveness, strengthening value addition, and exploring new and diversified markets,” he said.

EEPC India chairman Pankaj Chadha said the increase in tariff threatens to derail the ongoing trade talks between the two countries. “We are hoping for an interim deal,” he said. Engineering exports from India to the U.S. in 2024-2025 were to the tune of nearly $20 billion. Iron and steel products and aluminium, and electrical and industrial machinery are among the major exports.

Sudhir Sekhri, chairman of AEPC, said the U.S. is a key market for Indian ready-made garment exports, with the country holding a share of 33% in India’s total garment exports in 2024.

“While export of fashion garments will continue as it is not easy for the U.S. buyers to identify alternative suppliers immediately, export of volume products may move out of India if the additional tariff stays. With the initial 25% tariff, some of the U.S. buyers have accepted the shipments and some negotiated for discounts,” said K.M. Subramanian, president of the Tiruppur Exporters Association.

Ravi Sam, chairman of the Cotton Textiles Export Promotion Council, urged the government to announce a three-year moratorium on bank loans.

Pharma exempted

Namit Joshi, chairman, Pharmexcil, said the U.S. decision to temporarily exempt Indian pharma exports from increased tariffs reiterates India’s critical role in ensuring affordable, high-quality medicines for the American population.

India supplies over 40% of generics used in the U.S. Tariffs on Indian pharma will be counterproductive as any tariff will be passed on to U.S. consumers.