50 pc US tariff threatens aromatic oil, handicraft industries

Days after a 50 per cent tariff on Indian goods came into effect, many industries across the nation feared losing several crores in business and a few lakh livelihoods.

Uttar Pradesh's mentha oil industry, an aromatic oil-producing sector, has been facing a major issue with a potential loss of several crores of rupees, according to exporters who say the tariffs have been threatening the livelihoods of thousands of farmers and workers.

The additional 25 per cent tariff imposed by US President Donald Trump on India for its purchase of Russian crude oil came into effect on Wednesday (August 27), bringing the total amount of levies imposed on New Delhi to 50 per cent.

The Department of Homeland Security (DHS), in a draft order published on Monday, said the increased levies will hit Indian products that are "entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 am Eastern Daylight Time (EDT) on August 27, 2025".

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Orders have been cancelled

Earlier, Trump announced reciprocal tariffs of 25 per cent on India that came into effect on August 7, when tariffs on about 70 other nations also kicked in. Mentha oil is an aromatic compound used as a raw material to make a wide range of products.

Amrit Kapoor, an exporter, said orders have been put on hold or cancelled.

News agency PTI quoted him saying, "The cost of a product of ours that was priced at USD 20 increased to USD 30 overnight due to the 50 per cent duty. The buyer there doesn't understand how to get a USD 30 product from India. So, orders are on hold. The goods are being manufactured in the factory, and we don't know when they will go."

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10 lakh people may be affected

Kapoor highlighted the broader implications, particularly for farmers and workers who are directly and indirectly connected to the industry. He was concerned about the possibility of losing livelihoods.

"Over 10 lakh of our farmer brothers are connected to this. They will not be able to get enough money, and I think they will not even get the cost of their production back," he said.

He also raised concerns about the loss of employment for factory workers.

"If America continues this behaviour and our production decreases, it is possible that in the coming time we may have to reduce the workers at factories," he said.

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Tariff is a pressure tactic

A few manufacturing firms told PTI they believe this situation is temporary and will change. They also have demanded that the government launch special schemes to ensure that tariff-hit companies do not go out of business.

Shirish Gupta, the president of the Rampur chapter of the Indian Industries Federation, called the tariffs a "pressure tactic" and expressed faith in the government's response.

"The government should create schemes for the industries that are in danger due to the tariff issue so that they don't close down and people's livelihoods are not put at risk." He said he believed that "this is a temporary phase" and that "soon a positive result will come out".

Exporters in Moradabad have been feeling the heat. Moradabad, which is popularly known as the 'Brass City', exports handicrafts worth Rs 8,500 to Rs 9,000 crore every year, with nearly 75 per cent going to the US and the remaining to Europe and Gulf countries.

"The 50 per cent tariff imposed by the Trump administration has brought exports to a standstill. Orders worth more than Rs 300 crore have already been halted, and another Rs 150 crore worth of business is shifting to other countries," said Haji Iftekhar, an export firm owner.

"This could lead to a 50 per cent fall in US-bound exports, pushing nearly 2 lakh people into unemployment. Several firms have already begun laying off workers," he claimed.