Kerala’s traditional export industries are facing one of their gravest challenges in years, as the state government warns that new penalty tariffs imposed by the United States could severely hit revenues, disrupt supply chains and cost thousands of workers—particularly women—their livelihoods.
Replying to a Calling Attention Motion in the state Assembly on Tuesday, Finance Minister K N Balagopal said the tariff regime had already triggered alarm across key sectors such as marine products, spices, cashew, coir, tea and rubber—industries long regarded as the backbone of Kerala’s economy.
“These tariffs are not merely trade barriers. They are delivering economic shocks of a magnitude that Kerala is struggling to withstand,” Balagopal told legislators. He estimated the state’s export sector could suffer annual losses of between ₹2,500 crore and ₹4,500 crore.
Marine exports, especially shrimp, have been among the earliest victims. Kerala accounts for about 12–13 per cent of India’s seafood exports, with shrimp contributing the bulk of earnings.
But Washington has hiked anti-dumping duties on Indian shrimp from 1.4 per cent to 4.5 per cent, added countervailing duties, and imposed a penalty tariff of up to 25 per cent. The effective burden now exceeds 33 per cent, making Indian shrimp significantly more expensive in the US market.
“Orders are being cancelled, stocks are building up in cold storages and utilisation of processing plants has dropped below 20 per cent,” Balagopal said. He warned of large-scale unemployment in coastal areas, with women workers in shrimp processing units particularly at risk.
Kerala’s centuries-old spice trade is also in deep trouble. More than 80 per cent of India’s pepper exports originate from the state, along with cardamom, ginger, spice oils and oleoresins.
Balagopal noted that the US imports spice products worth over USD 700 million annually, but duties that could rise in stages to 50 per cent are threatening to wipe out Kerala’s competitiveness. “Exporters have already reported a six per cent 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.
The cashew sector, already under intense competition from Vietnam, is feeling the squeeze of higher tariffs. Coir exporters face similar barriers, losing access to niche handicraft markets in the US.
Tea, another mainstay of Kerala’s economy, is also vulnerable. With annual exports to the US worth around ₹700 crore, growers have begun reporting sharp declines in orders. Rising production costs and climate-related stresses have left plantations on the brink, and the tariff shock threatens to worsen the crisis.
Rubber exports are likewise expected to weaken. Balagopal said that only a pivot to value-added products could soften the blow.
Balagopal outlined both immediate and long-term measures. Emergency steps include concessional working capital loans for exporters, faster IGST refunds, energy subsidies and interim relief packages for workers.
In the longer run, strategies include diversifying export markets, shifting from dollar-based to rupee-based trade settlements, boosting market intelligence, supporting branding, strengthening collective bargaining and setting up trade facilitation centres in countries beyond the US. Institutions to help small and medium enterprises meet international standards are also on the agenda.
“These interventions will require strong support from the central government,” Balagopal said, adding that the state had already raised the issue with the Union Finance Minister and submitted recommendations to the 16th Finance Commission.
The state Industries Department has begun consultations with exporters, while the Gulati Institute of Finance & Taxation has convened expert roundtables. Balagopal said the government would also reach out to political parties to forge a broad consensus on addressing the crisis.
“We must act together to bring these issues to the Centre’s attention and secure the support Kerala urgently needs,” he told the Assembly.