Trump Tariffs: A Hit or an Opportunity?
When former US President Donald Trump fired the first salvo in a global trade war with a series of sweeping tariffs, few anticipated the ripple effects it would have across industries worldwide. Among the sectors caught in the crossfire was India鈥檚 burgeoning construction equipment and component market鈥攁n industry that, while not heavily dependent on US exports, found itself both challenged and surprisingly poised for opportunity.
In 2018, the Trump administration-imposed tariffs on steel and aluminium imports, later expanding duties to a wide array of goods under Section 232 and 301 of US trade law. These moves targeted key sectors including auto components, electricals, chemicals, and machinery鈥攕egments where India had emerging global stakes.
According to Rajesh Nath, Managing Director, VDMA India, the real impact was felt not in direct exports of Indian construction machinery to the US鈥攚hich remain limited鈥攂ut through the significant exposure of India鈥檚 auto component industry. 鈥淎uto components from India's total exports鈥�24 per cent of that goes to the U.S. That鈥檚 a big hit.鈥� He also highlighted companies like Motherson Sumi among those likely to feel the burn.
Even within construction equipment, many component manufacturers overlap with automotive part suppliers. These dual-use parts鈥攔anging from hydraulics to precision castings鈥攆aced potential price and volume shocks due to retaliatory tariffs and the subsequent supply chain disruptions.
Components in the crossfire
Anand Sundaresan, Director, Ammann India, provided critical context to the component issue. 鈥淲hen it comes to CKD (completely knocked down) components, duties are still very high in India, irrespective of the origin. But spare parts, which many construction machines depend on, are taxed based on classification. That may be less severely affected,鈥� he noted.
However, uncertainties remain. As Nath highlighted, definitions around CKD versus spare parts have already sparked tax conflicts鈥擵olkswagen being a recent example鈥攚here classification discrepancies can lead to inflated duties or retroactive penalties. In this fluid environment, Indian manufacturers must tread cautiously.
Export dip or opportunity boost?
Despite the immediate disruptions, not all voices in the industry see doom. Ajay Malik, Head of International Business, Action Construction Equipment (ACE), sees the trade reconfiguration as a windfall. 鈥淭he reconfiguration of global trade routes has opened up unprecedented opportunities for Indian exporters, particularly in the high-value construction equipment sector,鈥� said Malik.
He attributes this growth in part to global disillusionment with Chinese supply chains鈥攁 sentiment echoed by Nath who observed that at Hannover Messe, 鈥渁 full hall of Chinese exhibitors saw minimal footfall, while Indian booths were bustling.鈥� This anti-China sentiment across Europe and North America has created a vacuum that Indian firms are rapidly filling.
Malik added, 鈥淎t ACE, we view this shift as a clear validation of India鈥檚 rising stature as a dependable manufacturing hub. Bolstered by the 鈥楳ake in India鈥� initiative and robust policy support, Indian manufacturers like us are increasingly being seen as agile, quality-driven partners for global markets.鈥�
Rising through realignment
While India鈥檚 construction equipment exports to the US may still be in their infancy, the larger implications of Trump's tariff war lie in how it catalysed a shift in global supply chains. European and North American buyers, wary of overreliance on China and entangled in trade restrictions, have begun seeking out alternate partners. India鈥攚ith its scale, workforce, and improving ease of doing business鈥攊s increasingly in the spotlight.
Indeed, Indian construction equipment exports grew by nearly 25 per cent between 2019 and 2024, according to industry estimates, with new markets emerging in Southeast Asia, Africa, and Latin America. This diversification cushions the risk from US-centric disruptions and positions India as a neutral, stable supplier amid geopolitical turbulence.
Despite these gains, challenges remain. Volatile US trade policy, currency fluctuations, and domestic infrastructure bottlenecks can erode some of the competitive advantages Indian manufacturers are currently enjoying. Moreover, while companies like ACE have built a footprint in 42 countries, many small and mid-sized suppliers still lack the scale or capital to pivot quickly.
Even so, the consensus among industry leaders leans toward cautious optimism. As Sundaresan summarised, 鈥淭he direct impact on our construction machinery exports to the US may be minimal, but the indirect pressures鈥攐n components, supply chains, and policy uncertainty鈥攁re real. Yet these pressures are also forcing us to become more globally competitive.鈥�
The Trump tariff war, though initially viewed as a threat, has inadvertently opened up strategic pathways for India鈥檚 construction equipment sector. It has accelerated global diversification efforts, spotlighted India鈥檚 manufacturing promise, and nudged the industry toward greater resilience. As global trade continues to evolve, India鈥檚 real challenge鈥攁nd opportunity鈥攍ies not in shielding itself from disruption, but in leveraging it for sustained growth.
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