Trump’s Tariffs Deliver Major Blow To Indian Engineering Exports; EEPC Eyes New Markets

New Delhi, Aug 2 (KNN) India’s engineering goods sector is bracing for a sharp setback after President Trump announced a 25 percent tariff and additional penalties on all Indian imports, effective August 1. 

Exporters fear a significant blow to shipments, particularly in steel, aluminium, and related products, which make up the majority of India’s engineering exports to the US.

The US is India’s largest export market for engineering goods, with shipments rising 8.7 percent year-on-year to USD 19.15 billion in FY25 from USD 17.62 billion in FY24. 

Steel, aluminium, and derivative products alone account for over USD 12 billion—more than 60 percent of the total—which will now face higher costs and reduced competitiveness under the new tariff regime.

“This is a huge blow,” said Pankaj Chadha, Chairman of the Engineering Export Promotion Council of India (EEPC). 

“Exports of key items such as hot-rolled steel coils, stainless steel, aluminium sheets, and alloys will become costlier, likely resulting in a dip in shipments,” he added, according to The Economic Times.

The timing of the tariff announcement has added to exporters’ concerns. It comes even as India and the US were engaged in discussions over a possible bilateral trade agreement (BTA), amid rhetoric of a ‘special strategic partnership’.

“Donald Trump’s announcement came as a shock. On one hand, we were on the verge of finalising a BTA, and on the other, we now face sweeping tariffs,” Chadha said. 

He described the move as emblematic of Trump’s transactional approach to trade. “You have to give something to get something. But both sides have red lines—ours include dairy and agriculture—and if those are respected, a win-win deal is still possible. We await the official details before charting our next steps.”

In response, the EEPC is intensifying efforts to diversify markets. Chadha highlighted new opportunities in South America, with India close to signing Free Trade Agreements (FTAs) with Chile and Peru, and exploring possibilities in Mexico. 

“We are also in discussions with the EU. Expanding our global footprint and derisking from US dependence is critical in this tariff-heavy trade climate,” he said.

While a complete decoupling from the US market may not be possible, Chadha stressed that reliance can be strategically reduced. 

For now, the EEPC has advised exporters to proceed cautiously. “Once we understand the full extent of the new penalties, we will guide our members on the way forward,” Chadha said.

(KNN Bureau)