US Steel Tariffs Leave Indian Foundries Gasping

SEATTLE (Scrap Monster): Work has slowed or stopped in Kolkata, a major hub for India's steel foundries that export sanitary castings. Owners discuss distress privately but don't share much publicly, and workers are confused. 

But some owners, like Vijay Shankar Beriwal of Calcutta Iron Udyog, are not holding back. He blames the 50% tariff on steel and aluminum imposed by US President Donald Trump, which went into effect in June. Trump cited national security concerns under Section 232 of the US Trade Expansion Act of 1962 for the move. In addition to the steel tariffs, Trump has also imposed 25% "reciprocal tariffs" on most Indian goods. The US president has proposed an additional 25% tariff, set to go into effect later this month, in response to India's purchases of Russian oil. 

"The full impact has yet to hit the market, but the stressors have begun to show. Those with existing US orders are clearing them fast, but new orders are slow or absent. Many foundries have stopped work," he says. 

The 50% steel and aluminum tariff, part of Trump's protectionist trade policies, threatens to choke eastern India's export-driven foundries and medium and small enterprises (MSMEs), which rely heavily on the US market.

India exported $4.56 billion in iron, steel, and aluminium products to the US last year, including $587.5 million in iron and steel, $3.1 billion worth of iron or steel products, and $860 million in aluminium products, based on data from the Ministry of Commerce and Industry. This accounts for roughly 5.3% of India's $86.51 billion total exports to the US.

Although a smaller portion, they represent a significant share of India's foundry sector, which employs over 200,000 workers in labor-intensive production across more than 5,000 units, of which over 95% are categorized as small-scale. 

Moreover, unlike in the state of Maharashtra or Tamil Nadu, where foundries cater to domestic automotive and construction markets, eastern India's foundries specialise in export-oriented castings, making them particularly vulnerable to tariff disruptions.

Indian Commerce Minister Piyush Goyal has downplayed the impact of tariffs on steel and aluminium, arguing that steel and aluminium exports to the US are negligible.

"How does it matter if out of 145 million tons, you are not able to export 95,000 tons?" he said at a Bengal Chamber of Commerce and Industry event.

Courtesy: www.dw.com