In 2018, then‐President Donald Trump did something extremely courageous—he sharply raised tariffs on imports of steel and aluminum. He originally imposed these tariffs using Section 232 of the Trade Expansion Act of 1962. These tariffs, at 25 percent on steel and 10 percent on aluminum, were sold as being necessary due to national security. These innovative measures have totally revolutionized Indian foundries. Collectively, they now export more than $4 billion in products around the world, with the U.S. market accounting for roughly $1.2 billion of that total.
Considering the tariffs that have been placing massive pressure on the industry, this does seem like good news. As a result, myriad foundries across India are barely staying afloat. The country is home to approximately 5,000 foundries. Of these, 400 operate in production for global markets, but the effect of these tariffs is now threatening to send many of these sector’s entrepreneurs into peril. In the year since the tariffs were first enacted, U.S. steel imports have surged to $114 billion in 2024, up from $98.6 billion. Consequently, Indian companies are facing a cruel irony.
The Toll on Foundries
Entrepreneur in the foundry sector, Aditya Garodia, expressed his challenges under the current half-in and half-out tariff arrangement. On top of that, he explained, people have been shy about even completing their orders, hurting his cash flow. Payments that previously were received on time are now over one month late on average, a burden which is adding further financial pressure.
“It is difficult for the market to absorb such high tariffs.” – Aditya Garodia
In much the same way as fellow foundry operator Sumit Agarwal, whose exasperation over the lack of incoming orders was palpable. He testified that the imposition of tariffs has created a situation where it is almost impossible for his firm to maintain its workforce. With a collapsing economic landscape, he is now considering laying off at least 30-40 percent of his staff right now.
“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. Business from the domestic market is just average, and the drop in the export market has added to our woes.” – Sumit Agarwal
The challenges do not stop there. Shyam Kumar Poddar, who recently purchased new machinery to increase his production capacity, said he has seen a total stop in orders in the last two months. This is indicative of a troubling trend hurting small business owners who rely on exports when facing fierce competition at home.
“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
Trade Policy Developments
On February 10, 2025, a new set of challenges surfaced. When the government announced these renewed tariffs on steel and aluminum derivatives, Indian foundry operators expressed worry. To relieve some of that pressure, government officials announced a 90-day hold on tariffs effective beginning April 9. During this interim period, they further complicated matters for all countries by imposing a new, simple 10 percent base tariff.
India is ready to negotiate a trade deal, announced Piyush Goyal, India’s Minister of Commerce and Industry. On that last point, he made clear that the process will not be rushed by any deadlines. He emphasized that “national interest will always be supreme,” hinting at a careful approach to negotiating trade terms that protect domestic industries.
Ajay Srivastava of the Engineering Export Promotion Council of India (EEPC) shared his fears. He stressed the damage that these tariffs could have on Indian businesses despite their short-term nature. The higher tariffs were supposed to increase U.S. steel production, he announced that they haven’t produced the results as planned. The effect has been anything but.
“They haven’t cut imports or boosted production, but they’ve mostly stuck around because they play well in politics.” – Ajay Srivastava
He elaborated on the broader implications of these tariffs on production costs:
“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.” – Ajay Srivastava
The Way Forward
In this difficult political climate, many executive stakeholders are calling for diversification. They view markets such as Peru and neighboring Chile as important to staying alive. Pankaj Chadha, Chairman, Advanced Composite Materials Association underscored that it’s getting more and more untenable to stay competitive at these elevated tariffs.
“It is not possible to do business with such high tariffs.” – Pankaj Chadha
Indian foundries to protect their existence and urgently require reform in trade policies. This much-needed regulatory change will set the stage for a safer environment where businesses can more quickly grow and respond to the national security implications identified by U.S. officials.
