A worker is working in a steel plant in the suburbs of Jammu, India (Reuters)

Over the past few years, the United States has been Aditya Gargodia's main market, and he has exported more than 100 types of steel-derived products, such as fasteners, from his factory located in West Bengal, eastern India.

But since President Donald Trump took office and introduced a series of tariffs - initially a 25% tariff on steel and aluminum, as well as tariffs on individual countries - global markets have been under tension, creating significant uncertainty for businesses across all industries.

Gargodia, a director of Corona Steel Industries Private Limited, told Al Jazeera that due to the impact of tariffs, customers have slowed down their order receiving speed, with an average delay of one month in payments, and overall business has also slowed down because clients have taken a wait-and-see approach.

After Trump announced that the tariffs on steel and aluminum would be doubled to 50% starting June 4, Gargodia said it was "a fatal blow" because nearly 30% of orders were canceled. "The market found it hard to absorb such high tariffs."

He said that demand in the Indian domestic market has remained low due to competition from cheap Chinese products, and added that the future of Indian products depends on whether India can secure lower tariffs on its exports to the US compared to competitors.

Last year, India exported $4.56 billion worth of steel and aluminum products to the US.

"Tariffs play an important role in politics"

During his first term, Trump imposed a 25% tariff on steel and a 10% tariff on aluminum in 2018 under Section 232 of the Trade Expansion Act of 1962, citing national security concerns. However, some companies managed to avoid these tariffs as finished products were not subject to them.

But on February 10, 2025, he announced a 25% tariff on steel and aluminum, including their derivatives (or finished products), and abolished all exemptions.

Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), told Al Jazeera that the higher tariffs imposed in 2018 have failed to revitalize the US steel industry so far.

He said, "Since the initial implementation of the tariffs in 2018, steel imports into the US have continued to increase," rising from $98.6 billion to $114 billion in 2024, and they "have not reduced import volumes or increased production, but they have mostly stayed there because they perform well politically."

Therefore, prices in the US are much higher than in Europe or China, "leading to higher production costs for cars, construction, and machinery. India now needs a clear strategy to protect its trade interests, promote fair trade, and strengthen domestic manufacturing," Srivastava said.

US doubles steel import tariffs: Trump announces new tax during factory visit [English video]

Foundries are also affected

President Trump announced the so-called reciprocal tariffs on April 2, setting a 26% tariff rate on goods from India. On April 9, he suspended the policy for 90 days and imposed a 10% base tariff on all countries during this period, providing breathing space for these countries to negotiate separate trade agreements with the US.

Although a 10% rate is already difficult for businesses, foundries (where metal is melted and cast into shapes) say a 26% rate is too high for any business.

India has about 5,000 foundries, of which 400 serve both domestic and international markets, and another 100 are dedicated to exports. Some micro, small, and medium enterprises (MSMEs) supply raw iron, scrap, and other products to exporters.

Ravi Segal, chairman of the National Centre for Export Promotion (NCEP), said that the value of products exported by Indian contract manufacturers globally is around $4 billion, with $1.2 billion going to the US market. In the US, they not only compete with local contract manufacturers but also with suppliers from China and Turkey.

The latest round of tariffs will hit Indian foundries hard. Segal said that over 65% of foundries and their raw material suppliers are SMEs, which will "be hit first by the tariffs due to reduced orders." He also added that a tariff of 10% to 14% "will make it hard for us to survive."

Pradeep Kumar Madhogaria, partner at Yashi Castings, said that due to the uncertainty in the US market, some casting projects have been delayed or put on hold, especially those related to export-driven demand. Yashi Castings is a company that produces molds and trolleys for foundries.

Small factories hit hard

Sumit Agarwal, 44, is a manufacturer of industrial products in Kolkata, mainly producing fixtures, brackets, and other items. He told Al Jazeera that his business has been severely hit by the tariffs, and he is considering laying off some of his 15 employees.

Our company is small. After the tariffs were introduced, orders almost dried up, making it difficult to maintain operations with existing employees. I am considering cutting at least 30% to 40% of my staff. Domestic market business is mediocre, and the decline in the export market is adding insult to injury.

Can the US and China end the trade war? [English video]

70-year-old Shyam Kumar Podda runs a small sheet metal manufacturing factory in Kolkata. He recently invested about 800,000 rupees (approximately $9,400) in a hydraulic press, hoping to expand his business. But the decline in orders has hit him hard.

"I bought this machine four months ago to expand my business, but I haven't had any orders for the past two months."

"Our business relies on exporters because the domestic market is already very competitive, but the current situation is harming small entrepreneurs like us."

Pankaj Chada, chairman of the Engineering Exports Promotion Council (EEPC), told Al Jazeera that diversifying to countries like Peru and Chile, then exporting finished products to the US, is the only way to survive, as "it's impossible to do business under such high tariffs."

Despite the 90-day tariff suspension period nearing its end, the final numbers remain unclear as India and the US have not yet reached a final agreement. On Friday, India's Minister of Commerce and Industry, Piyush Goyal, told reporters that while India is ready to reach a trade agreement, "national interest remains supreme" and will not be driven by any deadline.

Currently, Gargodia hopes to find a solution as soon as possible. "No industry can survive in isolation," he said, listing the problems facing the US, including labor shortages and rising production and raw material costs. "India offers them a good alternative, with low labor costs and low production costs," he said.

Sources: Al Jazeera

Original: https://www.toutiao.com/article/7524413218463990308/

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