CTI Sounds Alarm Over U.S. Tariff Hikes, Calls for Retaliation

The Chamber of Trade and Industry (CTI) has expressed grave concerns regarding the U.S. decision to hike tariffs on Indian goods to 50%, which could cripple India's export-reliant industries. CTI Chairman Brijesh Goyal has penned a letter to Prime Minister Narendra Modi, stressing the urgency for decisive and strategic responses, including the imposition of retaliatory tariffs on U.S. imports.

Goyal highlighted that U.S. President Donald Trump, after previously setting a 25% tariff on Indian imports, now aims to escalate it to 50% starting from August 27. This abrupt change has incited confusion and uncertainty among Indian exporters and manufacturers, especially those with shipments en route or pending orders. "Exporters are puzzled. The fate of goods already shipped or nearing U.S. shores hangs in balance," he remarked.

The potential tariff increase is set to impact India's significant exports to the U.S., valued at Rs 1.7 lakh crore for 2024, encompassing engineering goods, steel products, and auto parts, currently taxed at 10%. A jump to 25% will inflate prices, undermining their competitiveness in the U.S. market. "A product priced at USD 100 currently sells for USD 110; the new tariff will push it to USD 125, likely slashing export volumes by 10-15%," noted Goyal.

Similar impacts loom over sectors like gems and jewellery, textiles, and electronics, all facing steep tariff hikes. Electronics, specifically smartphones, could see dire consequences. Goyal pointed out that a USD 100 smartphone, previously priced at USD 100.41 in the U.S., would now jump to USD 125 with the new duty. The pharmaceutical industry, which exported Rs 92,000 crore worth of goods duty-free, faces added costs, potentially benefiting competitors like Vietnam.

CTI warns about broader implications beyond financial losses, including massive job threats, as millions depend on exports to the U.S. Goyal urged the government to explore alternative markets such as Germany, the UK, Singapore, and Malaysia, where demand for Indian engineering goods is rising. He also advocated for reducing dependency on U.S. imports.

Currently, India imports significant quantities from the U.S., including minerals, jewellery, and tech components. "India should seek other global suppliers to lessen its reliance on American goods," Goyal advised.

(With inputs from agencies.)