‘Orders cancelled, stocks piling’ – Kerala warns US tariff threaten Rs 2,500–4,500 crore hit to exports

KOCHI : Kerala estimates its export sector to see a Rs 2,500-4,500 crore hit annually due to US tariffs on Indian imports. Marine exports, particularly shrimp, are among the first to feel the impact.

Finance Minister Shri K N Balagopal, responding to a Calling Attention Motion in the state Assembly on Tuesday, said the new tariff regime has created deep concerns across marine products, spices, cashews, coir, tea, and rubber—sectors that form the backbone of Kerala’s economy.

“These tariffs are not just trade barriers. They are creating major economic shocks in Kerala,” Balagopal told legislators, as per a report by PTI.

According to Balagopal, marine exports are among the first casualties, as Kerala accounts for around 12–13% of India’s seafood exports, with shrimp being the biggest earner.

Additionally, what’s making the dent deeper is that Washington has raised anti-dumping duties on Indian shrimp to 4.5% from 1.4%, alongside countervailing duties and an additional penalty tariff of up to 25%. Balagopal said the effective tariff now exceeds 33%, making Indian shrimp far more expensive in the US market.

“Orders are being cancelled, stocks are piling up in cold storages, and the utilisation of processing plants has slumped below 20%,” he said.

Spice trade under pressure; US buys $700 m in spices annually
Kerala’s spice trade is also reeling under the tariff pressure. The state produces over 80% of India’s pepper exports and significant quantities of cardamom, ginger, spice oils, and oleo resins. The state’s finance minister highlighted that the US imports spice products worth over $700 million annually.

“Exporters report a 6% fall in orders since the tariffs were announced, while rivals such as Vietnam and Indonesia are eyeing a larger share of the market,” he said.

Tea exports worth Rs 700 crore under strain
Kerala’s cashew sector faces stiff competition from Vietnam, while higher tariffs are squeezing coir exporters and shutting niche markets for handicrafts in the US. Tea, another key export, is also vulnerable. Annual exports to the US are worth around $700 crore, but plantations are already seeing sharp order declines due to rising production costs and climate change impacts. Rubber exports, too, are expected to suffer.

Women workers face job risks
The Kerala government has warned that new penalty tariffs imposed by the United States could slash revenues, disrupt supply chains, and throw thousands of workers—many of them women—out of jobs.

“This will create large-scale unemployment in coastal areas, and the survival of small and medium processors will be at risk,” the minister warned.

Government plans relief measures
Balagopal outlined short-term measures, including concessional working capital loans for exporters, faster IGST refunds, energy subsidies, and interim relief packages for affected workers.

For the long term, the government aims to diversify export markets, shift from dollar- to rupee-based trade settlements, improve market intelligence, support branding efforts, strengthen collective bargaining, and open trade facilitation centres beyond the US.

The state also plans to help small and medium enterprises meet international standards. “These interventions will require comprehensive assistance from the central government,” Balagopal said, noting that Kerala had already raised the issue with the Union Finance Minister and submitted recommendations to the 16th Finance Commission.