The US tea consumers are poised to get a bitter sip ahead as the US Tariff hike is set to push Indian tea prices up this Diwali season. During the months of September-October when the impact of tariff hike is expected to come in effect consumers and tea lovers are likely to face a hike in tea prices as suggested by Gujarat-based tea producer Wagh Bakri that exports 10-12 percent of ₹3,000 crore worth of tea it sells annually.
In his detailed interview to a reputed news source Sanjay Singhal, CEO of Wagh Bakri Tea Group said that “The US is our number one export market. The second biggest market is the middle east. Then comes Europe and Australia. India is the largest grower of premium black tea. There are other tea-producing countries like Indonesia and Kenya, but their tea quality is of a lower grade. So Indian tea is one of the best options for consumers looking to have good black tea. Secondly, the US does not produce any tea. So, with the increase in tariffs, there will be an inflation in prices as no distributor or company will be able to absorb 50 percent tariff. If the tariffs play out, consumer prices will increase in the US,”.
With the latest move of Donald Trump imposing 50 per cent tariff on Indian goods entering the US market, tea from Indian markets is set to have a price surge in the US. Since the US does not produce any tea and Indian competitors’ countries like Indonesia and Kenya producing tea with lower grade there is no chance of decline in the demand of Indian tea, however consumers will have to pay a hefty price to sip a cup of quality tea. Worthless to say India is the largest producer of premium black tea. With the latest 50 per cent tariff on Indian goods consumers will have to bear the burden of increased tea prices in the US.
The US Tea Market
Three types of Indian tea are shipped to the US — loose tea, private label tea manufactured in India for major US retailers like Walmart, and packaged tea brands such as Wagh Bakri. All three categories are expected to feel the pinch of the tariff. Adding more woes to the condition is the festive timing ahead of which Indian exporters ship large consignment to meet the increasing demand of tea in the US.
Trade Tensions Loom Amid US Tariff
India exported goods worth $87 billion to the US last year. With Washington’s escalating tariffs, exporters across multiple sectors — including textiles, food, and FMCG — fear heavy losses. However, there may be a glimmer of relief. Speaking on Friday after meeting Russian President Vladimir Putin, President Trump hinted that Washington might hold back on imposing secondary sanctions on countries like India that continue to buy Russian crude oil.