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Job loss fears in India after Trump tariff shock

Published: June 05, 2019 17:14:17 | Updated: June 07, 2019 20:36:51


If you've bought a luxury leather handbag in Milan or Manhattan recently, chances are high that it was made in Sanjay Leekha's three-storey factory in Faridabad on the outskirts of Delhi, reports BBC.

But on Wednesday, the 33-year-old family-owned business - along with thousands of other Indian manufacturers - will become the latest victim of the Trump administration's effort to reshape its international trading relationships.

Exporters of goods including imitation jewellery, building materials, solar cells and processed food will face a hike of up to 10 per cent in the US tariffs imposed on their products, following the White House's revocation of India's membership of the Generalized System of Preferences, or GSP.

First introduced in 1976, the GSP is a preferential trading agreement between the US and more than 120 countries and territories. It's designed to help developing countries grow their economies, while bringing down the price of imported products for American consumers.

India was by far the largest beneficiary of the GSP - $6.3bn (£4.9bn) of its exports enjoyed concessionary tariffs - or no tariffs at all - in the United States last year.

Among the companies to have gained a significant competitive advantage from GSP exemptions is Mr Leekha's firm, Alpine Apparels, which produces as many as 40,000 handbags a month. But US buyers of his bespoke products are already asking the firm to absorb the cost of higher levies by reducing its prices.

If he is forced to do that, Mr Leekha says, he will eventually have no choice but to lay off some of his 1,000 employees.

 

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