25% High Tariff Set To Double On Exports To US On August 27, Indian Businesses In Crisis

On August 27, the high tariff of 25% is set to double on exports to the United States. This will adversely affect the businesses that were capable of excelling.

Unemployment In India

According to The Economic Times, "We were shocked by the 25% tariff, and thinking about how to meet this problem, how to face this," said Ishtiaq Ahmad Khan, a fourth-generation carpet maker in Bhadohi, in the giant state of Uttar Pradesh. "But now it's 50%, so it became impossible. We're afraid that a lot of people will be unemployed."

Carpet Business

In India, making carpets is a big business; 98% of the products used to be shipped overseas. Hand-tufted carpets are valuable in the trade. Persian-style hand-knotted rugs are the most valuable. In recent years, nearly 60% of that stock has gone to buyers in the United States. For U.S. importers, that $500 rug now comes with a $125 tariff and possibly a $250 one.

Livelihood

About 80% of the workers at his family's company, Ajaz Carpets, are still farmers, raising crops of wheat, rice and vegetables most of the year. Like more than 800 million of their countrymen, they depend on free government handouts of 5-kilogram bags of grain. But the piecemeal work they do, spinning and dyeing yarn, designing weaving and finishing carpets, earns most households an extra $170 a month.

That is the difference between simply surviving on government rations and sending their children to schools, buying consumer goods and keeping their region's economy growing.

Indian Gems

On Aug. 7, when Trump announced the 50% rate, Kirit Bhansali, chair of the industry's main association, wrote that 30% of the global trade in Indian gems was at risk.

Advantage Over India

"A blanket tariff of this magnitude is severely devastating for the sector," he wrote. Rival sectors in Turkey and Thailand are much smaller, but they will gain an unbeatable advantage over India thanks to the lower national tariffs by Trump. Bhansali said India's gem dealers will need help in paying back loans and argued that India's banks should help.

Other Industries

Other industries in line to face unbearable wipeouts include textiles and garments, aquaculture -- mainly farmed shrimp -- and furniture. They are not India's flashiest businesses, but together they employ many millions of workers, and the billions they earn have helped keep India financially strong during periods of crisis.