{"id":67470,"date":"2025-08-13T21:56:11","date_gmt":"2025-08-13T21:56:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/67470\/"},"modified":"2025-08-13T21:56:11","modified_gmt":"2025-08-13T21:56:11","slug":"trump-tariff-crushes-job-intensive-sectors-spares-those-heavy-on-capital-tech","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/67470\/","title":{"rendered":"Trump tariff crushes job-intensive sectors, spares those heavy on capital, tech"},"content":{"rendered":"

Ironic as it may sound, the US\u2019s 50 per cent tariff <\/a>has spread deep distress in all the job-intensive export sectors like textile, fabric and apparel, gems and jewellery, leather and footwear and marine products, while largely sparing the capital-and-tech-intensive electronics, pharmaceuticals, refined petroleum products and auto and auto component sectors.<\/p>\n

No new US export orders have come India\u2019s way in the job-intensive sectors ever since US President Donald Trump announced the reciprocal 25 per cent tariff on July 30. The penalty tariff of 25 per cent, announced on August 6 and which comes into effect from August 27, has stopped shipments of even old orders.<\/p>\n

With no manufacturing activity in these sectors dominated by MSMEs, several lakh workers face immediate job loss. The least affected sectors are, on the other hand, dominated by large industries and produce fewer jobs.<\/p>\n

India at a disadvantage <\/p>\n

Ajay Sahai, director general and CEO of the Federation of Indian Export Organisations (FIEO), says 55 per cent of India\u2019s total exports to US is hit, the rest 45 per cent being spared by the US\u2019s \u201cexempted\u201d list spanning the electronics, energy and pharmaceutical sectors. With a 50 per cent tariff, Sahai said India faces a comparative disadvantage of 30 per cent against its competitors from South and South East Asia and 35 per cent from the European Union.<\/p>\n

South and South East Asia attract 19-20 per cent tariff, the EU, along with Japan and Korea, attract 15 per cent tariff, while China attracts 30 per cent.<\/p>\n

Meanwhile, the Commerce and Industry Ministry has told the worried sectors to \u201cwait for three weeks\u201d for any good news to emerge from the US \u2013 pinning all hopes on Trump\u2019s scheduled meeting with Russian President Vladimir Putin on August 15 for a Ukraine peace deal. If all goes well, the ministry expects the US to ease the tariff.<\/p>\n

Also read: Indian govt and exporters on a wing and a prayer as Trump\u2019s tariff bites<\/a><\/p>\n

But here is how badly the job-intensive sectors have been hit.<\/p>\n

Textile, fabric and apparel sector <\/p>\n

The textile, fabric and apparel sector may not export much in value (3.4 per cent of total US exports, at $10 billion) and operate on very low margins, but it was the first to be severely hit ever since the US announced a base tariff of 10 per cent in April.<\/p>\n

Bhadresh Dodhia, former chairman of the Manmade and Technical Textiles Export Promotion Council, says all manufacturing activities have come to a \u201cfull stop\u201d, including for old orders. About 3-4 lakh workers, half of which are in apparel, stare at immediate lay-offs if the tariff doesn\u2019t ease. No fresh order is coming their way.<\/p>\n

He says US importers are ready to absorb a 25 per cent tariff, applicable for all others but the 25 per cent penalty puts India out of the contest. To save jobs, the Commerce and Industry Ministry is considering several proposals, which include interest subvention, \u201cmonetarium\u201d (or moratorium for two years), soft loans, higher GST threshold (from Rs 1,000 to Rs 5,000) that would enable exporters to sell in domestic market and employment linked incentive (ELI) for employees\u2019 state insurance (ESI) liabilities \u2014 just like the ELI for large companies announced on July 1.<\/p>\n

On their part, Dodhia says, the ministry has been asked to rectify the current \u201cinverted\u201d GST structure for man-made fibres (MMFs) category \u2014 18 per cent on petrochemical inputs to make artificial fibres, but 12 per cent on yarn and 5 per cent on fabric. Cotton attracts uniform 5 per cent GST across the value chain.<\/p>\n

Also read: US retailers halt orders from India after Trump\u2019s 50 pc tariff order: Report<\/a><\/p>\n

Meanwhile, the industry is abuzz that a few companies with overseas facilities in Vietnam, Indonesia, and African countries are planning to shift their American business there. For the rest, the immediate alternative is to divert their products to the domestic market.<\/p>\n

Gems and jewellery sector <\/p>\n

Next to electronics, gems and jewellery (including diamond) account for the second largest exports to the US (11.5 per cent against electronics\u2019 18.4 per cent), valued at $10 billion. It is as job-intensive as the textile industry.<\/p>\n

Kirit Bhansali, chairman of the Gem and Jewellery Export Promotion Council (GJEPC), says the situation is \u201cunbearable\u201d with all activities suspended and no new orders. About 1.7 lakh jobs are on the line (70,000 outlets in the US would also be impacted), some units are planning to shift to Dubai. For these exporters, December is their biggest season for orders.<\/p>\n

\u201cThe Commerce and Industry Ministry has asked us to wait for three weeks for the picture to be clear. It is waiting for August 15 when Trump meets Putin, hoping that a positive outcome will ease the US tariff,\u201d he said about his last meeting with the ministry officials.<\/p>\n

Bhansali refuses to consider and dwell on alternatives, saying that is a long-term project.<\/p>\n

Andhra shrimp farmers <\/p>\n

Andhra Pradesh\u2019s shrimp farmers and exporters have been distressed since the US imposed 10 per cent universal tariff in April. It slowed down shrimp harvesting and buying.<\/p>\n

The 50 per cent tariff has hit them harder with 5.7 per cent countervailing duty and 3.96 per cent anti-dumping duty compounding it further (total tariff is 59.7 per cent).<\/p>\n

According to IPR Mohan Raju, president of the Prawn Farmers Federation of India, Andhra shrimp farmers account for nearly 80 per cent of all shrimp exports from India to the US (9 lakh tonnes out of 11.5 lakh tonnes). All shrimp productions in the state are for exports.<\/p>\n

\u201c(Farmgate) shrimp prices have fallen by Rs 50 per kg for all categories\u201d, Raju said, unsure about how much loss the exporters are making. It is a lean season for shrimp business, Raju added, pointing out that bulk orders from the US come twice in a year, in April and October-November, accounting for 40 per cent exports each.<\/p>\n

The rest are short-term buying, which is happening now, as a spillover from the earlier orders. \u201cNo new short orders have come,” he laments.<\/p>\n

The fear is, Raju said, the US orders will shift entirely to Ecuador, which is a bigger shrimp producer (15.4 lakh ton) than India and is exempt from the US tariff. Mexico will also benefit with a 15 per cent tariff but it is a small producer.<\/p>\n

How many shrimp farmers are hit? <\/p>\n

MVS Nagi Reddy, president of the YSR Congress\u2019 farmers wing, said about 70-80 per cent small and marginal farmers are directly engaged and are hit, but not the rest 20-30 per cent who give their land on contract to big farmers and corporations. Since the contracts are signed for three years and advance payments are made every year, those farmers aren\u2019t affected. He is not sure how many farmers are engaged but says about 2 lakh hectare are used for shrimp cultivation.<\/p>\n

Also read: How will US tariff hit rupee, foreign investment and the common Indian?<\/a><\/p>\n

In contrast, the capital-and-tech intensive sectors are not too worried.<\/p>\n

Electronics items <\/p>\n

Electronics is the largest chunk of India\u2019s export to the US (18.4 per cent of the total) and most of the items are in the US\u2019s \u201cexempted\u201d list. These include smartphones and laptops.<\/p>\n

Shomit Gupta, senior manager (policy) at the Electronics and Computer Software Export Promotion Council, said these account for 73 per cent ($10.65 billion) of total sectoral exports of $14.65 billion to the US in FY25.<\/p>\n

The non-exempted items include PCBs, battery chargers, electric inverters, photovoltaic cells, optical fibres etc., which are affected. Gupta said, the main concern is to find new markets for these items valued at $4 billion in FY25. He added that many of the items like solar panels have already found markets in Europe, Middle East and Latin America; the rest are being pushed into the domestic market. He is sure that the US orders may go down but not stop due to quality and trust factors.<\/p>\n

Pharmaceuticals, refined petroleum <\/p>\n

Pharmaceutical exports are the third largest to the US (11.3 per cent of total) \u2013 after electronics and gems and jewellery \u2013 and come entirely in the \u201cexempted\u201d category. Raja Bhanu, director general of the Pharmaceuticals Export Promotion Council of India said, they are in the \u201cwait and watch\u201d mood because Trump has threatened tariffs.<\/p>\n

Indian pharma companies exported one-third of their total exports of $30.46 billion into the US in FY25.<\/p>\n

Refined petroleum products (4.9 per cent of total exports) also enjoy exempted status.<\/p>\n

Auto sector attracts a 25 per cent tariff but that is so for the world, except Mexico and Canada (0 per cent).<\/p>\n

Nayara Energy faces music <\/p>\n

Once hailed as the symbol of India-Russia cooperation, Nayara Energy seems to be paying the maximum price for buying cheap Russian oil. It is owned majorly by Russian energy major Rosneft and other smaller companies.<\/p>\n

Financial Times recently reported that \u201cIndian refiners had gained $16 billion in extra profit from importing discounted Russian oil, with almost $6 billion (or over Rs 50,000 crore) of that going to Reliance Industries.\u201d These refiners included oil PSUs too. Nayara Energy is in the crosshairs of many.<\/p>\n

First the European Union imposed sanctions on it on July 18 for its oil trade with Russia, following which global shippers and financers shunned it. Now comes another bad news: The SBI has halted its overseas transactions fearing sanctions from the EU and the US.<\/p>\n","protected":false},"excerpt":{"rendered":"Ironic as it may sound, the US\u2019s 50 per cent tariff has spread deep distress in all the…\n","protected":false},"author":2,"featured_media":67471,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,46],"class_list":["post-67470","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-ca","tag-canada","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/67470","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=67470"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/67470\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/67471"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=67470"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=67470"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=67470"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}