Exports To US Surge, Imports Decline Ahead Of August 1 Deadline

Chennai: Trade with the US is witnessing a divergent trend in anticipation of reciprocal tariffs after August 1 and the Bilateral Trade Agreement. The exports to the US in June surged 23 per cent while imports shrunk by 10 per cent.

In June, exports to the US went up by 23.5 per cent and shipments were up by 22 per cent during the April-June period.

“Exporters have been frontloading their goods ahead of the August 1 deadline at 10 per cent basic tariff. From the deals the US has struck with other countries, exporters find that the Bilateral Trade Agreement will not offer duties less than the 10 per cent basic tariff,” said Pankaj Chadha, chairman of Engineering Export Promotion Council.

As part of the trade deals with Vietnam and Indonesia, the US has lowered the tariffs to 20 per cent and 19 per cent respectively. It has not eliminated the reciprocal tariffs fully or the sectoral tariffs on steel, aluminium and automobiles.

“This trend will continue in July as well. Exporters will try to push as much as goods before the announcement of BTA or August deadline. We expect the exports to drop after the BTA or from August,” he added. In products like apparels exporters are fulfilling the orders from the US, though the buyers are expecting reduction in duty, said A Shaktivel, vice-chairman of Apparel Export Promotion Council.

India had requested the US to provide zero duty for labour-intensive products like textiles, footwear and leather. However, the industry is not expecting zero duty, instead better tariffs compared to the competitors.

In the case of imports, buyers of goods like almonds, pistachios, apples, oranges, walnuts and pecan nuts are waiting for tariffs to be eliminated by the Indian government under the BTA. They have reduced their purchases till the announcement of the deal. This has led to a decline in imports by 10.6 per cent in June.