Which sectors are worst hit by tariffs? , Pg10

Key Highlights:

• The U.S. imposed 50% tariffs on imports from India effective August 27, impacting several sectors.
• Shrimp exports to the U.S. were $2.4 billion in 2024-25, now facing a 60% tariff.
• Diamond, gold, and jewellery exports to the U.S. totaled $10 billion in 2024-25, with tariffs rising to 52.1%.
• Textiles and apparel exports to the U.S. reached $10.8 billion in 2024-25, facing a 63.9% tariff.
• Carpet exports to the U.S. amounted to $1.2 billion in 2024-25, with tariffs increasing to 52.9%.

Detailed Insights:

• The intensity of tariff impact depends on the export amount to the U.S., the U.S. share in total exports, and the final tariff rate.
• Shrimp prices in Andhra Pradesh already fell by 20% after an initial 25% tariff was imposed on August 7, with further price drops expected.
• The diamond polishing industry in Surat, employing about 12 lakh people, is experiencing production cuts due to increased tariffs.
• The textiles and apparel sector is severely affected, with exporters in Tiruppur rushing shipments and hubs in Noida-Gurugram freezing capacity expansions.
• Other affected sectors include handicrafts, leather, shoes, furniture, bedding, and agricultural products like basmati rice, spices, tea, and pulses.
• Sectors with a modest impact include organic chemicals ($2.7 billion in exports, 54% tariff) and steel, aluminium, and copper ($4.7 billion in exports, 17% of total).
• The government is considering a multi-ministry plan to support exporters and is promoting 'vocal for local' to reduce dependence on exports.
• The Reserve Bank of India is prepared to offer assistance, and the government aims to diversify export destinations and utilize existing free trade agreements.

Key Concepts Involved:

• Tariff: A tax or duty imposed on goods when they are moved across a customs border.
• Exports: Goods or services produced in one country and sold to buyers in another.
• Free Trade Agreement: A pact between two or more countries to reduce barriers to imports and exports among them.