By Sanskriti Global Exports by Himanshu Gupta
The Unyielding Shadow: How Trump-Era Tariffs Continue to Batter India's US Exports
Introduction
In the complex and often turbulent world of international trade, legacy policies can cast long and unyielding shadows. A recent report, highlighted by the BBC and authored by the Global Trade Research Initiative (GTRI), has cast a stark light on one such shadow: the persistent impact of Trump-era tariffs on India's export performance to the United States. The headline finding is both direct and deeply concerning—Indian exports have plunged, with the US market now identified as our “most severely affected” partner due to these protectionist measures. For the Indian import-export community, this is not merely a news headline; it is a direct challenge to bottom lines, a threat to established supply chains, and a critical call for strategic re-evaluation. As a trade analyst, my goal here is to dissect the findings of this report, translate them into actionable intelligence, and outline the strategic imperatives for Indian businesses navigating this difficult terrain.
Unpacking the Numbers: The GTRI Report's Stark Findings
The analysis from Ajay Srivastava of the GTRI provides a clear, data-backed verdict on a situation many exporters have been feeling anecdotally for years. The tariffs, primarily the Section 232 duties on steel (25%) and aluminum (10%) and various Section 301 tariffs, were initially implemented between 2018 and 2019. While administrations have changed in Washington, these levies have largely remained in place, creating a sustained barrier to entry for Indian goods.
According to the GTRI's research, the cumulative effect has been a significant erosion of India's market share in specific categories. While the BBC article provides a high-level summary, the underlying data points to a substantial downturn. From 2018 to the present, exports in the targeted product categories have seen a decline of over 11.3% compared to their pre-tariff growth trajectory. For context, these are not fringe products; they represent core components of India's manufacturing and engineering export basket.
The core of the issue is simple price competitiveness. A 25% tariff on a steel product, for instance, makes an Indian offering instantly uncompetitive against domestic US producers or imports from countries exempted from the tariffs (like Canada and Mexico). This forces Indian exporters into an impossible choice: absorb the crippling cost and operate at a loss, or price themselves out of the market entirely. The GTRI report confirms that, in most cases, the latter has occurred, leading to a direct loss of business and a search by US importers for more stable, tariff-free supply chain partners.
Implications for the Indian Import-Export Community
The GTRI's findings are a critical signal that this is not a temporary storm but a new climate. Indian businesses must adapt or risk being left behind. Here are the key implications and strategic considerations:
- Margin Compression and Erosion of Competitiveness: This is the most immediate impact. The high tariffs directly attack profitability. For MSMEs, which form the backbone of our export ecosystem, absorbing such costs is unsustainable. This pressure forces a difficult conversation about the long-term viability of catering to the US market for these specific commodity-grade products.
- Urgent Need for Market Diversification: The report underscores the immense risk of over-reliance on a single market, especially one subject to volatile trade policies. This is a powerful catalyst for accelerating diversification efforts. Exporters should aggressively pursue opportunities in markets where India has a strategic advantage, such as the European Union, the Middle East (particularly the UAE and Saudi Arabia under new trade agreements), and the burgeoning markets of Southeast Asia (ASEAN).
- A Shift Up the Value Chain: The tariffs have disproportionately affected raw materials and intermediate goods (like basic steel and aluminum products). A key defensive and offensive strategy is to move up the value chain. Instead of exporting raw steel, focus on finished, high-precision engineering components. These specialized products are often less price-sensitive, have more resilient demand, and may fall under different HS codes that are not subject to the same punitive tariffs.
- Supply Chain Re-evaluation by US Buyers: Indian exporters must recognize that their US counterparts are also under pressure. They are actively de-risking their supply chains by 'nearshoring' (sourcing from Mexico/Canada) or 'friend-shoring'. To remain relevant, Indian firms must offer value beyond price—superior quality, unmatched reliability, and innovative solutions that justify navigating the tariff barrier.
- Increased Importance of Advocacy and Diplomatic Channels: This is a macro issue requiring a macro response. It is crucial for industry bodies like FIEO, CII, and ASSOCHAM to use this GTRI data to intensify lobbying efforts. They must continue to engage with the Government of India to press for a diplomatic resolution, such as securing country-specific exemptions or negotiating a bilateral trade package that addresses these tariff concerns.
- Leveraging Free Trade Agreements (FTAs): The current FTAs with Australia and the UAE, and the ongoing negotiations with the UK and EU, become even more critical. These agreements provide a pathway to growth in stable policy environments, offering a vital counterbalance to the uncertainty in the US market. Exporters must become experts in utilising the benefits of these FTAs to their fullest extent.
Conclusion: A Call for Resilience and Reinvention
The GTRI report is more than a summary of past performance; it is a forecast of future challenges if the status quo persists. The tariffs enacted under a previous administration continue to be a structural impediment to one of India's most significant trade relationships. Waiting for a political resolution is not a viable business strategy. The Indian export community's famed resilience must now be channeled into strategic reinvention. The path forward lies in a three-pronged approach: aggressive diversification into new and stable markets, a deliberate climb up the manufacturing value chain to create less price-sensitive products, and a concerted effort to advocate for a more predictable and fair global trade environment. The shadow of these tariffs is long, but it is not insurmountable for an industry prepared to adapt, innovate, and explore new horizons.
Source: Original