Trump tariffs: To beat 50% duty, exporters speed up US consignments

NEW DELHI/MUMBAI: Having worked out a three-way split of 25% US reciprocal tariffs that kicked in on Thursday, Indian exporters are rushing shipments ahead of the Aug 27 deadline, when Donald Trump’s “secondary sanctions” on India will double the customs duty to 50%.“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 is into leather and non-leather footwear business.Similarly, Gurgaon-based Richa Global Exports is seeking to ensure that a large part of the orders for the Fall-Winter season is shipped, so that the damage caused by Trump’s tariffs is controlled. “The situation changed yesterday because of the additional 25% 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 the company’s boss Virender Uppal.For several exporters, advancing shipments has meant that some of the manpower has been redeployed to meet the requirements of US buyers. Like with the 10% tariff, which has been in place since early April, Indian businesses have worked out an arrangement with several buyers where the 25% burden is being split equally, with the seller giving a discount of 7-8%, the American buyer reducing its margin by the same level, and the rest being passed on to consumers.But life isn’t easy, especially for small players, who have much lower bargaining power. For them life is going to be difficult. In any case, exporters are worried about what happens once the duty jumps to 50%.“This is a huge setback to the labour-intensive apparel export industry. There is no way industry can absorb this. I am sure govt 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 govt steps in with direct fiscal support to the industry,” said AEPC chairman Sudhir Sekhri.Describing it as a catastrophic situation, Tirupur Exporters’ Association president Raja M Shanmugam sought govt intervention, arguing that it is no longer feasible to export to the US due to the low margins. For gems & jewellery too, the prognosis is not good, with companies predicting a steep fall in exports.Bankers said that much of the exports are on credit and there is a risk of default.