The state of Kerala faces a big money problem as the United States puts new, higher taxes on things coming from India. This move by the US could deeply hurt Kerala’s key money-making areas, like its spice trade and computer parts making. Seeing the danger, Kerala’s Chief Minister quickly said the government will look closely at how bad these new taxes will be for the state’s workers and businesses. This sudden change from the US puts many jobs and companies in Kerala at risk right now, forcing local leaders to find quick ways to protect the state’s money system. The Chief Minister’s promise to check the damage shows how serious the situation is for the state’s future.
Current Situation
The United States has recently increased import duties on goods from India, a move that is expected to have a serious impact on Kerala’s economy. The Chief Minister of Kerala, Pinarayi Vijayan, has stated that his government will carry out a detailed study to interpret the full effects of these new tariffs. The US has applied a total tariff of 50 percent on many Indian products. This includes a 25 percent tax that started on August 7, 2025. another 25 percent tax that will begin on August 27, 2025.
Why the Tariffs Were Put in Place
The reason for these increased tariffs from the United States is linked to India’s continued buying of oil from Russia. The US sees these purchases as unfair trade practices and has imposed what it calls “reciprocal” duties.
Kerala’s Chief Minister Speaks Out
Kerala’s Chief Minister, Pinarayi Vijayan, has openly criticized the US tariff hikes. He said on Monday that these tariffs would greatly harm the state’s economy.
“The US action will seriously affect the export of products from Kerala. The US is the second largest importer of agricultural products from Kerala. More than 20 per cent of the total exports of cashew nuts, rice, vegetables, processed fruits. cereal powders are shipped to the US,” Chief Minister Pinarayi Vijayan said. He also added, “Kerala also leads the country in the number of seafood processing units and the additional duty will directly hit our seafood exports.”
The Chief Minister called the 50 percent tariff a “blatant violation of global trade principles” and warned that it would cause severe problems for Kerala’s main exports. He stressed that this situation puts at risk the jobs of workers and farmers who support the state’s economy.
Concerns from the Finance Minister
Kerala’s Finance Minister, K. N. Balagopal, has also voiced strong concerns. He called the 50 percent tariff a “bullying tactic” by the US aimed at controlling India’s market.
“The high tariffs from the US will surely impact our state, especially in the export sector. We are the largest marine producers. Apart from that, there are spices extracts, tea-coffee, cashew and other agricultural products,” Finance Minister K. N. Balagopal stated. He further warned that this “tariff war will worsen our economy more than Covid.”
The Finance Minister has urged the central government to take a strong stance against the US and to organize a meeting with all states to create plans for protecting the country’s trade and economy. He pointed out that these tariffs could also affect the money collected by Indian states as taxes and harm sectors like health, education. other services.
Main Products Affected in Kerala
The US is a very essential market for Kerala, being the second largest buyer of its farm products. Over 20 percent of Kerala’s total exports of agricultural items go to the US. Key exports from Kerala that face a threat from these new tariffs include:
- Cashew nuts: 46 percent of cashew kernel exports from Kerala go to the US.
- Rice, vegetables, processed fruits. cereal flour.
- Seafood: Kerala has the most seafood processing units in India. 27 percent of its marine product exports in 2023-24 went to the US.
- Spices: About 30 percent of Kerala’s pepper, cardamom, turmeric. nutmeg exports are sent to the US.
- Coir and coir products: 37 percent of coir exports from Kerala are for the US market.
- Rubber products.
- Garments.
- Tea and Coffee: Around 20-30 percent of tea and coffee from Kerala go to the US.
Some exporters have already seen a drop in new orders.
Predicted Economic Impact on Kerala
Experts and officials in Kerala are foreseeing significant financial losses due to these tariffs. The state is looking at a total potential export loss of 5,300 crore rupees.
| Export Category | Estimated Loss (Crore Rupees) |
|---|---|
| Spices | 2,900 |
| Seafood | 1,080 |
| Cashew, Coir. Pulses | 1,080 |
| Tea and Coffee | 250 |
The fisheries sector alone could see its exports drop significantly, impacting the lives of about one million people who depend on it. There is also concern that reduced exports could lead to job losses and lower wages for workers and farmers, as companies might be forced to cut prices for their products. The tariffs might also cause prices to rise in India and weaken the value of the Indian rupee if less foreign money comes into the country.
Steps the Kerala Government Will Take
The Kerala government has announced that it will hold a high-level meeting to review the possible effects of the US tariffs on Indian imports. This meeting, expected to be led by the Chief Minister, will bring together vital officials from the Industries, Commerce. Agriculture departments, along with representatives from major export organizations. The state government plans to:
- Conduct a detailed study to fully assess the crisis.
- Hold round-table discussions with experts, economists. producers to figure out the best way forward.
- Ask the Union Ministry of Commerce for help, including ideas for export support and finding new markets.
- Consider sending a group to New Delhi to talk about the issue with the central government.
The government believes it is crucial that India does not give in to trade actions that harm its exporters.
Wider Impact on India
While Kerala is expected to feel a strong impact, financial rating agencies have given differing views on the broader effect on India. Crisil Ratings has warned that India’s diamond polishing, shrimp, home textile. carpet industries could face significant drops in income. But, S&P Global Ratings has suggested that the US tariffs are unlikely to greatly affect India’s overall economic growth. This is because India’s economy does not rely heavily on trade. its exports to the US make up only about 2 percent of its total economic output. Also, crucial sectors like medicines that export to the US are not included in these new tariffs. The US is India’s largest trading partner. In 2024-25, the total trade between the two countries was 186 billion US dollars. India sent out goods worth 86. 5 billion US dollars to the US and brought in 45. 3 billion US dollars worth of goods. 
