Tariffs Jolt Cargo Routes

Good Morning. US president Donald Trump imposed 25% further tariffs over the continued purchase of Russian crude by India. Now, except for a small list, the total tariffs on Indian goods will be 50%. The tariffs come into effect on August 27. New Delhi called these tariffs unjustified and unreasonable. It’s not just exporters who are in for disruptions. The tariff threat could trigger significant shifts in how goods from India reach the US and who bears the brunt of these changes.

In other news, India’s central bank, the Reserve Bank of India (RBI), retained its growth outlook for India despite global turmoil. Meanwhile, are better times ahead for the movie industry?

DECODE THE NEWS

Trump’s Tariffs Could Disrupt How Indian Goods Reach The US

What? 

Starting August 7, the Donald Trump administration will impose a 25% import duty on certain Indian products, escalating its trade rhetoric ahead of the US elections. The White House claims India hasn’t been granting American companies fair access, prompting retaliatory tariffs aimed at everything from engineering goods to auto components and homeware.

On August 6, Donald Trump announced an additional 25% import duty on Indian goods, effective 21 days from the order, for all items imported or cleared for US consumption.

While headlines have focused on how this will affect exporters, the deeper and less visible disruption may be in how Indian goods now move, by air or by sea.

Behind the scenes, cargo airlines, shipping lines and freight forwarders are already recalibrating. With export margins under pressure, even a small shift in mode of transport can make or break a deal.

“The moment tariffs go up, the total cost of the product for the buyer — called landed cost — also goes up. To offset this, businesses may shift from air freight to sea freight. Even a 2% saving in transport can make a difference when you're dealing with a 25% tariff,” J Krishnan, former president and board of advisors, The Air Cargo Agents Association of India (ACAAI), told The Core.

Why?

That’s because many Indian exports to the US — like garments, auto components, or home decor — aren’t luxury items. Their value doesn’t justify expensive shipping.

“Air cargo makes sense when time is critical or when goods are high-value. But for most Indian products, the cost of freight is a big deal. So when margins shrink, sea becomes the smarter option,” Krishnan added.

Although it’s early to predict the full impact, delivery timelines are already stretching as exporters shift from air to slower sea freight to cut costs. This could disrupt inventory cycles in the US, with some sectors facing temporary stockpiles now and potential shortages or delays in the coming weeks.

But what happens to the air cargo industry when businesses make that switch?

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wFROM THE PERIPHERY

RBI Holds Growth Outlook: The RBI on Wednesday kept the repo rate unchanged and retained its GDP growth forecast for FY26 at 6.5%, despite global headwinds, including the US imposing a 25% tariff on Indian exports from August 1, Business Standard reported.

Outcome: RBI governor Sanjay Malhotra said global uncertainties had already been factored into projections. He cited limited data to justify no revision in the growth outlook. Inflation for FY26 was revised downward to 3.1%. While analysts warn the US tariffs could dent growth by 20 – 40 basis points, the RBI believes monetary transmission from earlier rate cuts is ongoing and sees no major inflation impact.

Impact: While the RBI kept rates unchanged, investment bank Goldman Sachs lowered India’s 2025 GDP forecast to 6.5%, citing US trade tensions after Trump’s 25% tariff on Indian goods. It also cut the 2026 forecast to 6.4% from 6.6%.

Renewables Up, Coal Down. In July 2025, Indian power plants sharply reduced coal purchases and drew from record-high stockpiles instead, according to a report by Reuters. Coal-based power generation fell 4.2%, while hydropower and renewables surged, lowering coal’s share of electricity to a five-year low of 64.3%. 

Backdrop: Coal India’s output and supplies also declined amid growing competition from private miners. 

By the Numbers: This shift reflects India’s accelerating clean energy transition, backed by a record 22 GW of new solar and wind capacity this year. The government is aiming for for 500 GW of non-fossil capacity by 2030, steadily reducing reliance on coal.

Better Times Ahead For The Movies? The net loss for India's biggest multiplex chain, PVR Inox, narrowed significantly to Rs 54 crore in the first quarter of this year as compared to Rs 179 crore in the same quarter last year.

The Context: According to MoneyControl managing director Ajay Bijli credited this to higher footfalls backed by good films. Among good performers were Sitaare Zameen Pe, Mission Impossible and Final Destination Bloodlines, among others. PVR Inox's losses reflect the difficult times the movie business has faced since the pandemic. With big-ticket films becoming few and far between, and the option to watch everything else on OTT platforms, it has been difficult to attract audiences.

What Next? From screening the election counting to re-releasing hold blockbusters, the company has tried multiple tricks in its book. Bijli said that the lineup of movies till December is hopeful. But they aren't going to be fully relying on that for revenue. It has plans to open co-working spaces and gaming arcades to keep the footfall going.

New Pilot Training Debated: India is considering introducing the Multi-Crew Pilot Licence (MPL), which offers airline-specific training, focusing on simulators and multi-crew operations alongside the existing Commercial Pilot Licence (CPL), which requires solo flying experience to modernise pilot training. Aviation regulator, the Directorate General of Civil Aviation (DGCA), will meet stakeholders to explore the MPL, which includes more simulator-based, airline-specific training.

Fast Facts: Already used by airlines like Lufthansa and Singapore Airlines, MPL could streamline training as India prepares for rising pilot demand, with over 2,000 aircraft on order.

Critical Moment: While proponents say MPL better suits modern aviation needs, critics warn India’s regulatory system may not yet be strong enough to oversee such a shift. Both CPL and MPL could operate concurrently if approved.

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PODCAST

On Episode 648 of The Core Report, financial journalist Govindraj Ethiraj talks to Madan Sabnavis, Chief Economist at Bank of Baroda as well as Ayaz Memon, veteran sports journalist and commentator.

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• The India-England series has turned the tide for test cricket. What could that mean?

👥 THE TEAM

✍️ Zinal Dedhia, Kudrat Wadhwa | ✂️ Rohini Chatterji | 🎧 Joshua Thomas