News / EU deal and tariff relief hopes tighten India's export capacity

Photo: VesselFinder

Possible lower tariffs on India’s US exports, alongside the recent free-trade agreement with the EU, has already tightened capacity to the US, with rate rises expected to follow.  

One US-based Indian importer told The Loadstar that, while reducing US tariffs on India, from 50% to 18%, would “of course be welcome news”, there were issues that could follow.  

The source said questions remained on the implementation date of the tariff reduction, as President Trump’s social media announcement has not so far materialised as an official executive order, probably due the partial US government shutdown. 

Then, should the tariff be officially lowered, importers are concerned it might not be sustainable, and “subject to again change if the US unilaterally decides so”.  

The importer source said: “It is the reality of the world of global supply chain directors today – we are yo-yos on a string, being pulled up and down on a daily basis, trying to find a semblance of predictability. A challenge indeed.”  

And according to the source, despite the agreement not yet official, “space is already tight”, with “Maersk bookings India to US East Coast sold out for the next two sailings.”

Reduced export capacity for India’s manufacturing is expected to be exacerbated by the recent free-trade agreement between India and the EU, hailed as “the mother of all trade deals” by the bloc. 

“I would expect a sudden onslaught of demand from the US and, coming on the heels of the India-Europe recent accord, that India’s factories will be overwhelmed with a surge of orders,” said the shipper, but warned: “Vessel space will be tight and surely the carriers will immediately attempt to raise rates.”