Kolkata, India — For the past several years, the United States has been a major market for Aditya Garodia to export more than 100 items of steel derivatives like fasteners from his factory in West Bengal state in eastern India.

But ever since US President Donald Trump took office and unleashed a range of tariffs – 25 percent on steel and aluminium initially, as well as standalone country tariffs – global markets have been on edge, creating significant uncertainty for businesses across sectors.

Garodia, director of Corona Steel Industry Pvt Ltd, told Al Jazeera that as a result of the tariffs, clients have slowed picking up their orders, delaying payments by a month on average, while business in general has slowed as customers adopted a wait-and-watch policy.

When Trump announced that he was doubling tariffs on steel and aluminium to 50 percent from June 4, it was “like a nail in a coffin”, Garodia said, as nearly 30 percent of orders were cancelled. “It is difficult for the market to absorb such high tariffs.”

Demand in the domestic market has also been low because of competition from cheaper Chinese products, he said, adding their future depends on India negotiating a lower tariff for its exports to the US than its competitors.

Last year, India exported $4.56bn worth of iron, steel and aluminium products to the US.

Tariffs ‘play well in politics’

During his first term, Trump in 2018 imposed tariffs of 25 percent on steel and 10 percent on aluminium under Section 232 of the Trade Expansion Act of 1962, citing national security concerns. But certain businesses had managed to escape, as there were no tariffs on finished products.

But on February 10, 2025, he announced 25 percent tariffs on steel and aluminium, including derivatives – or finished products – and removed all exemptions.

Ajay Srivastava, founder of Global Trade Research Initiative (GTRI), a trade research group, told Al Jazeera that higher tariffs imposed in 2018 have so far failed to revive the US steel industry.

“Since the tariffs were first implemented in 2018, [US] steel imports have increased,” rising from $98.6bn to $114bn in 2024, he said, and they “haven’t cut imports or boosted production, but they’ve mostly stuck around because they play well in politics”.

As a result, prices in the US are far higher than in Europe or China, “making cars, buildings, and machines more expensive to produce. India now needs a clear strategy to protect its trade interests, push for fair deals and strengthen domestic manufacturing,” Srivastava said.

Foundries also affected

In the so-called reciprocal tariffs that President Trump announced on April 2, he set a rate of 26 percent for goods from India. He put that on hold on April 9 for 90 days and introduced a 10 percent base tariff on all countries for the interim, giving them breathing room to strike individual trade deals with the US.

While the 10 percent is hard enough on the businesses, foundries – where metals are melted to cast into shape – say 26 percent is too high for any business to absorb.

India has approximately 5,000 foundries, of which 400 cater to both domestic and international markets and a further 100 are exclusively for exports. Several Micro, Small and Medium Enterprises (MSMEs), in turn, supply pig iron, scrap and other items to the exporters.

Indian foundries export products worth about $4bn globally, out of which the US market is $1.2bn, Ravi Sehgal, chairman of National Centre for Export Promotion (NCEP), said. In the US, they compete not only with local foundries but also with Chinese and Turkish suppliers.

The latest set of tariffs will be a considerable blow to Indian foundries. More than 65 percent of these, and their suppliers of raw materials, are MSMEs that will “face the brunt of tariffs due to lower orders”, Sehgal said. Tariffs beyond 10-14 percent “would [make it] difficult for us to survive,” he added.

Pradeep Kumar Madhogaria, partner in Yashi Castings, which makes moulding boxes and pallet cars for foundries, said that several foundry projects have been either deferred or shelved, particularly those aligned to export-driven demand, due to the uncertainty in the US market.

Smaller units badly hit

Sumit Agarwal, 44, a Kolkata-based manufacturer of clamps, brackets and other items used in industrial goods, told Al Jazeera that his business has been hit hard by the tariffs and he is thinking of laying off some of his 15 employees.

“We are a small unit. The orders have practically dried up after the introduction of tariffs, which has made it difficult for us to continue with our existing staff. I am thinking about cutting at least 30-40 percent of my manpower. Business from the domestic market is just average, and the drop in the export market has added to our woes.”

Shyam Kumar Poddar, 70, who runs a small unit of sheet metal fabrication in Kolkata, recently invested about 800,000 rupees ($9,400) to buy a hydraulic press with an aim to expand his business. But the drop in orders has affected him badly.

“I bought the machine just four months ago to expand my business, but there have been absolutely no orders for the past two months.”

“We depend on exporters for our business as there is already an intense competition in the domestic market, but the present scenario is harming small entrepreneurs like us.”

Pankaj Chadha, chairman of Engineering Export Promotion Council of India (EEPC), an industry body, told Al Jazeera that diversification to countries like Peru and Chile, who would then export their finished products to the US, is the only way for survival as it was “not possible to do business with such high tariffs”.

Even as the 90-day pause on tariffs is set to expire soon, it’s not clear yet what the final number will be as India and the US are yet to finalise a deal. On Friday, Piyush Goyal, India’s minister of trade and industry, told reporters that while India was ready to make a trade deal, “National interest will always be supreme“, and it would not be driven by any deadlines.

For now, Garodia is hoping a solution will be found fast. “No industry can survive in isolation,” he said, listing US problems, including a manpower shortage as well as higher production and raw material costs. “India offers them a good substitute with cheap labour and low cost of production,” he said.