The Trump administration’s proposed tariffs on Indian imports are poised to have a significant impact on India’s construction and mineral sectors. By imposing a 27% tariff on goods like steel, aluminium, and construction materials, the U.S. government aims to protect American industries, but the move could disrupt global trade, particularly affecting Indian exporters.
Under Trump’s proposal, a 27% tariff would be levied on a wide range of imports from India, including steel, aluminium, and various construction materials. This rate was calculated based on the cumulative impact of tariffs and non-tariff barriers that other countries, including India, impose on U.S. goods.
The tariffs would directly target Indian exports in sectors critical to the global construction supply chain, such as steel and aluminium.
India is a key exporter of steel and aluminium globally, and the U.S. is an important market. While India’s steel exports to the U.S. make up a small fraction of total steel exports, around 5%, the aluminium sector faces a more significant risk. Nearly 12% of India’s aluminium exports are destined for the U.S. market.
The proposed tariffs would directly affect major Indian companies such as Tata Steel, JSW Steel, and Jindal Steel and Power Limited (JSPL). As steel and aluminium prices in the U.S. rise due to the tariff, Indian companies would face reduced demand and competitive disadvantages.
The U.S. is already a smaller player in India’s steel export market, with a 25% decline in imports from the U.S. in recent years. If tariffs are implemented, Indian producers would struggle further, especially as domestic prices remain low. Additionally, global steel prices are already under pressure, and tariffs would likely exacerbate these issues.
In 2023, the U.S. residential construction sector spent US$13 billion on imported materials, which accounted for 7% of the total US$184 billion spent on new housing materials. A significant portion of these materials—around 27%—came from countries like India.
The imposition of a 27% tariff would directly raise the cost of these imports, potentially driving up construction costs in the U.S. This increase would affect both new single-family homes and multifamily housing projects.
Indian companies such as Hindalco Industries, which supply essential materials to the U.S., could see reduced demand. The higher prices could dampen sales volumes, leading to lower revenues and profitability for Indian exporters in the construction sector.
The proposed tariffs also extend beyond steel and aluminium, potentially impacting other important sectors like minerals and lime. Companies involved in these sectors, such as Larsen & Toubroand SAIL, could see reduced demand as U.S. construction companies may turn to other markets with more favourable tariff conditions.
Moreover, as U.S. prices for imported materials rise, Indian businesses in the mineral sector would face increasing pressure to diversify their customer base and find alternative markets for their products. However, the cost burden and competitive challenges could limit their ability to successfully do so, further impacting their growth prospects.
Trump’s proposed 27% tariff on Indian imports would significantly affect India’s construction and mineral sectors. While there may be opportunities for India to negotiate tariff reductions, the overall impact could be lasting, reshaping global trade dynamics and challenging the growth prospects of Indian exporters.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Published on: Apr 3, 2025, 12:03 PM IST
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