Increase in U.S. Tariffs Poses Threat to Kerala's Main Exports, Claims Chief Minister Pinarayi Vijayan
In a concerning development for Kerala's economy, the recent US tariff hike is expected to have a significant impact, according to the state's Chief Minister, Pinarayi Vijayan. The tariffs, totalling 50%, primarily affect sectors like textiles, jewellery, apparel, seafood, and processed foods, but Kerala's key agricultural exports such as cashew nuts, rice, vegetables, processed fruits, and cereal flour are particularly at risk.
The US is a crucial export market for Kerala’s cashew industry. Importers in the US have already asked exporters to bear the additional tariff cost, leading to postponed purchases and potential long-term damage to the sector. Over 20% of Kerala’s exports in these agricultural commodities go to the US, so a 50% tariff hike will reduce competitiveness, causing lower export demand and affecting farmer income and related industries.
The tariffs will not only shrink export volumes but also depress domestic production by making exports unviable, threatening livelihoods and causing economic losses estimated in thousands of crores of rupees for Kerala’s export economy. The Kerala government is still assessing the full economic impact but confirms the tariff hike as a major setback with long-term consequences for farmers, laborers, and exporters across sectors.
Additional related products from Kerala such as spices, seafood, coir, and tea are also facing serious tariff-induced challenges, reflecting a broad weakening of the state’s export-driven economy. The US is the second-largest importer of Kerala's agricultural produce, accounting for over 20% of the state's exports, making it an important trading partner, particularly in the agricultural sector.
Economists warn that the tariff hike could halve exports in key sectors such as textiles, jewellery, apparel, seafood, and processed foods, potentially impacting the GDP growth of India. The US tariff hike may necessitate adjustments to India's overall trade strategy and could prompt India to rethink its global trade strategy. The tariff hike is a significant development in the ongoing U.S.-India trade relations.
The Kerala government plans to conduct a detailed assessment to measure the impact of the US tariffs on the state's exports. As the situation unfolds, it is clear that the US tariff hike poses a serious threat to Kerala's economy, particularly its key agricultural exports, and could have far-reaching implications for the state's farmers, laborers, and exporters.
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