Impact of US Tariffs on Indian Steel Foundries
The work in Kolkata has slowed down or stopped, an important center for India’s steel foundry that exports sanitary products. Owners discuss privately from need, but do not share much publicly, and the employees are confused. Some owners, such as Vijay Shankar Beriwal from Calcutta Iron Udyog, do not hold back and accuse the 50% tariff for steel and aluminum imposed by US President Donald Trump. The tariffs, which came into force in June, have threatened to suffocate the export-oriented foundries and medium and small companies (MSMES) in East India.
Effects of the Tariffs
The 50% steel and aluminum tariff, part of Trump’s protectionist trade policy, has started to show its effects. Those with existing US orders will clarify quickly, but new orders are slow or absent. Many foundries have stopped working. India exported iron, steel, and aluminum products worth $4.56 billion to the US last year, including iron and steel worth $587.5 million, iron or steel products worth $3.1 billion, and $860 million in aluminum products.
Massive Blow to Smaller Foundries
Although they are a smaller part, they represent a significant share of the Indian foundry sector, which employs over 200,000 workers in labor-intensive production in more than 5,000 units, of which over 95% are classified as small. In contrast to the state of Maharashtra or Tamil Nadu, where foundries meet domestic automotive and hardware stores, the foundries in East India specialize in export-oriented castings, which means that they are particularly susceptible to tariff disorders.
Chinese Steel Dumping
The domestic market is also under pressure. With the expiry of export orders, manufacturers flood the local market and tighten the competition. Some customers require 5% price reductions, others want a loan. These are unprecedented steps. The Federation of Indian Export Organizations (FIIO) estimates a decline in US steel exports by 85%, which leads to an excess that could reduce the prices for domestic steel by 6-8%, which further presses the MSME margins.
Government Intervention
India’s steel and aluminum exports in the European Union were under pressure due to the tasks, and the CBAM, a carbon tax on high-performance imports, could make it worse by further eroding India’s competitiveness. The foundry sector mainly includes small players with tight profit margins. With the 50% tariff, we order cost prohibitively, and the detour of markets such as the Middle East or Southeast Asia requires time and capital that lack many of these companies. The Indian government reacts to the situation with a multi-stage strategy, including a bilateral trade agreement with the United States to reduce tariffs and measures such as interest subsidies, loan guarantees, and reduced certification fees to support MSMEs.
Need for Urgent Support
The industry urgently needs certain support from the government to stay afloat. Without quick measures, MSMEs could be faced with layoffs and closures at the beginning of 2026. The government’s intervention is crucial to protect the foundries and ensure their survival. The industry is hopeful that the government will take necessary steps to mitigate the effects of the tariffs and support the MSMEs.
