US-India commerce: Tariffs to hit leather sector; Kolkata exporters pondering ‘Made in Europe’ question

India’s leather business, a significant labour-intensive sector with exports value $4.1 billion, has been hit onerous by US President Donald Trump’s choice to impose a 25% tariff on imports from India. The transfer, coupled with a further 25% tariff on Russian oil purchases from 27 August 2025, is predicted to deepen the disaster exporters are dealing with.Government information reveals India exported almost $4.1 billion value of leather and leather merchandise between April 2024 and February 2025, with the US accounting for $870 million. The American market makes up round 20% of India’s total leather exports. Kolkata, one of many nation’s key hubs for leather items, faces the sharpest affect as West Bengal alone contributes 50% of India’s exports in this sector. Out of two,020 tanneries nationwide, 538 function in the state, which additionally homes 230 leather footwear items and 436 leather items items, in accordance to an ET report.According to specialists, the sudden spike in duties has left them paralysed. Ramesh Juneja, vice chairman of the Council for Leather Exports, defined the uncertainty saying, “The industry is in a wait-and-watch mode. We are unable to offer any discounts to buyers either. Right now, we are just waiting for some clarity to emerge. Last year, the leather industry did Rs 50,000 crore business in leather and leather product exports and footwear. The US market is a significant geography for us.”Industry leaders additional warned that the tariff construction will make Indian merchandise far much less aggressive. “If it sticks to where it is now, we will have about an 8.5% MFN tax; 25% would be the reciprocal tax, and then the 25% extra tariff for the oil trade with Russia. This is going to have an impact on the price and cost at which the American importer imports the product from this country,” Arjun Mukund Kulkarni, president of the Indian Leather Products Association (ILPA) advised ET. He additionally added that the shock will ripple into European markets as properly, as Kolkata made merchandise are bought to the Europe which then sells them to America.“So, it is going to be a challenge, and we will have to figure out ways and means around this situation,” Kulkarni noted.Exporters are already considering workarounds, such as partial production in Europe, ET reported. “A lot of people are thinking on these lines, and it could then be labelled as a ‘Made in Europe’ product, or from any other country where the final production takes place before being sold to the US. So, people are looking at such ideas where the final product can have a ‘Made in Europe’ stamp,” Kulkarni mentioned.The footwear category is expected to suffer the most, given that it represents 40% of leather products worldwide. Kanishk Maheshwari, co-founder and managing director of Primus Partners India, highlighted the scale of the problem saying, “In 2024-25, leather footwear exports to the US were close to $500 million, which had been growing steadily over the last four years. With this new tariff, a pair of shoes that landed at $100 in US retail will now face almost 10 times more duty (from 5-8% to 50% now) and add an extra $50 to the price, while Vietnamese or Indonesian footwear competes at a duty of just 19-20%. This cost gap alone explains why US buyers are already pivoting orders away from the Agra and Kanpur clusters.”Although Vietnam, Indonesia and China also face tariffs, theirs remain significantly lower, Vietnam at 20%, China at 30%, and Bangladesh at 35%. “Only India and Brazil are subject to a 50% US tariff. This has instantly wiped the competitiveness that India had worked to build through various schemes like rebates under RoDTEP and various export incentives. India’s 1% share in the $100-billion US leather import market is about to shrink further,” Maheshwari told the outlet.Experts suggest market diversification, product repositioning, and quality upgrades may soften the blow, but stress that government support will be crucial. Kulkarni calls for urgent intervention, “The government needs to come up with some revolutionary ideas, subsidising or supporting the industry. The Brazilian government, for instance, has reached out and is giving subsidies. The Indian government will also have to think about something to keep the exporters afloat amid such high tariffs.”