From 50% to 10–25%: Tariff Cuts Open Doors for MSMEs

Effective from October 14, 2025, the United States will implement new tariffs on imported wood products under Section 232 of the Trade Expansion Act of 1962. This includes a 10% tariff on softwood lumber and a 25% tariff on kitchen cabinets, bathroom vanities, and upholstered furniture. These measures aim to bolster domestic industries by reducing reliance on foreign imports, which the U.S. government deems a threat to national security due to their impact on domestic manufacturing and supply chain stability. Notably, the tariffs on cabinets and furniture are set to increase in 2026 up to 50% for cabinets and 30% for upholstered furniture unless trade agreements are reached. Countries with existing trade deals, like the UK, EU, and Japan, will face lower wood tariff ceilings (10–15%). In contrast, India, which previously faced a 50% duty, will now benefit from significantly reduced tariffs, enhancing its competitiveness in the U.S. market.

Under the updated rules, India’s exports will face duties ranging from 10% to 25%, replacing the existing 50% anti-dumping and countervailing tariffs that were initially imposed to counter unfair subsidies and predatory practices in the global wood market. While countries like China and Canada remain subject to higher tariffs due to significant subsidy-related concerns, India’s relatively smaller share and compliance with WTO norms have allowed for a reduced duty. This framework is intended to balance domestic industry protection with affordable prices for US consumers, while giving compliant exporters like India an opportunity to maintain market presence.

For Indian MSMEs, the reduction in tariffs is a welcome development. Many small and medium exporters in the wooden furniture, plywood, and decorative handicrafts segments had faced high entry costs due to the 50% duty, which heavily impacted profit margins. With the new 10–25% tariff, Indian products become more price-competitive, enabling exporters to offer better rates while maintaining profitability. Sectors most impacted include furniture and home décor items such as chairs, tables, and cabinets, as well as handicrafts and artisanal wooden products, and plywood used in construction and interiors. Reduced tariffs mean lower cost per unit for exports, better competitiveness against other low-tariff countries, and an opportunity to expand market share in the US, which remains a significant importer of Indian wood products. However, MSMEs must remain compliant with US import regulations, quality standards, and documentation requirements, as failure to meet these can negate the advantage of lower duties.

To capitalise on this opportunity, MSMEs should act quickly. Conducting market research to identify high-demand regions and buyers in the US is essential, along with ensuring all products meet American safety, labeling, and quality standards. Exporters can leverage schemes such as RoDTEP for duty remission and the Market Access Initiative (MAI) to offset costs. Engaging with export promotion councils like the Furniture, Handicrafts, and Wood Product EPCs can provide trade leads, logistics support, and guidance. Participating in US trade shows, B2B expos, or collaborations with importers can secure bulk orders, while revising pricing strategies to reflect lower duties can improve competitiveness.

Overall, the US tariff reduction presents a strategic opening for Indian MSMEs in the wood and furniture sectors. While market access and cost competitiveness improve, success depends on adherence to quality standards and proactive engagement with trade promotion bodies. By leveraging government schemes, strengthening buyer relationships, and aligning products with market expectations, Indian exporters can convert this policy shift into sustained growth, capturing a larger share of the lucrative US market.