$12 billion Trump tariff refund for Indian exporters. Which stocks may benefit?

The US Customs and Border Protection announced on Monday that the first phase of its refund-processing platform is now operational, allowing importers and customs brokers to begin filing claims to recover the duties they had paid.

More than 56,000 registered importers can now begin filing claims through a new federal portal to recover more than $166 billion in tariff refunds, including interest. This follows the Supreme Court's landmark 6-3 ruling on February 20, which struck down President Donald Trump's sweeping import tariffs as unconstitutional. For businesses that absorbed billions in unexpected costs last year, Monday is the day they have been waiting for.

Trump's tariff flip-flops

Trump initially introduced 10% tariffs on Indian exports to the US on April 2 last year. The duties were later hiked to 25% in August, and then to 50% over India’s imports of Russian oil. In February this year, the tariffs were reduced to 18% following negotiations and a trade deal. However, the subsequent ruling by the Supreme Court nullified the entire regime.

According to the Global Trade Research Initiative (GTRI), around 53% of India’s shipments to the US, which largely comprise textiles and apparel, were subject to the higher tariffs. Indian shrimp and textile companies derive a significant portion of their revenue from exports to the US. Earlier last year, the stocks had declined sharply following Trump’s tariff flip-flops. However, the latest refunds and hopes for subsequent demand recovery are boosting the stocks today.

Which stocks may benefit?

Textile companies like Gokaldas Exports, Pearl Global, Indo Count and Welspun Living were among the stocks that were sharply battered last year following the imposition of the harsh tariffs. Of the nearly $12 billion in refunds tied to Indian exports, textiles and apparel are estimated to account for around $4 billion, followed by engineering goods with a similar share and chemicals contributing about $2 billion, while other sectors make up the remainder. Key players include chemical companies like Aarti Industries, Gujarat Fluorochemicals, and Navin Fluorine. Shrimp feed companies, along with gems and jewelry exporters, will also be under watch.

It is important to note that Indian exporters will not be receiving any of the tariff refunds - they will be received by their American clients who imported their goods into the US. “Payments go only to US importers, and exporters have no legal right to claim them. Indian exporters, therefore, have no direct legal route to claim refunds,” explains Ajay Srivastava, founder of GTRI. Hence, any potential recovery of these refunds will depend on commercial discussions. “Exporters with stronger bargaining power, especially in textiles and engineering goods, may secure better terms in future orders, the think tank added.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)