It’s Becoming A Big Nightmare: Indian American Businesses Reel From Tariff Turmoil

Photo: Auro Bhatt, the owner of San Francisco, CA-based New India Bazaar poses with his family outside his store. (Photo provided)

BY REENA RATHORE

SAN FRANCISCO, CA — When a customer walks into Srinivas Sakhamuri’s Vijetha Indian Supermarket in San Ramon, Dublin, Tracy, or Mountain House, they’re greeted by the familiar aromas of basmati rice, fragrant spices, and freshly imported snacks. But behind those aisles, Sakhamuri is grappling with something far less fragrant—a mounting tariff crisis that’s straining Indian American businesses across the board.

India-West reached out to several Indian business owners across Southern and Northern California; while many did not respond to requests for comment, a few were open enough to share their perspectives. From off the record comments provided by store owners to India-West, the economic problems are mounting. Some confessed that they did not want to be seen as passing on the costs of shipping and other peripherals to customers.

“Because of the tariffs, local purchases are getting impacted severely,” Sakhamuri told India-West. “We do import from India directly. And we are also buying from local vendors but it’s becoming a challenge to trust or chase them. One container is 10 percent, another 20, another 50. They also don’t have any clue. It’s a big nightmare for us.”

For him, unpredictability is the hardest part. For months, he’s walked a tightrope between rising costs and customer affordability. “Prices of imported goods rise with every shipment,” he said. “For the last 6 months, I was absorbing the 10 percent. We revised pricing for a few products, but 98 percent we could absorb.”

But with old stock depleted, and suppliers adding “10-25 percent tariff straight away on the invoice,” he’s been forced to raise prices. “When we have to buy some items on a regular basis, we have to change the pricing with no option.”

The looming 50 percent tariff—set to apply to containers shipped after August 27—has yet to hit him, but Sakhamuri said it will be nearly impossible to absorb or manage once it does.

Sourcing alternatives offers little relief. “From other countries, we will not be able to do many items,” he said. “…Some options are Burma or South Africa. But you don’t get the same taste and customers can easily tell. And it’s going to take five to six months to receive the products.”

He’s most worried about consumer response. “Obviously, the buying capacity will go down,” he said. “People are already getting scared. If the grocery bill becomes $300 instead of $200, people will cut down. The ‘luxury’ products—snacks, ready-to-eat foods—that’s where we make a little bit more margin.”

He likened the situation to the pandemic. “During COVID, people were scared they wouldn’t get the product. Now they know they’ll get it, but they’ll have to pay a premium. It’s a very tough challenge.”

Since 2020, crises have arrived in waves: the pandemic, export bans by Indian government on wheat flour and rice, and now tariffs. “Day by day, it is becoming a challenge for business owners,” he said.

Sakhamuri isn’t asking for a full rollback, just stability. “I’m not saying it should be zero,” he said. “But anything beyond 10 percent will make it very hard for us to expand our business.”

He believes the market will eventually recover but the pain will be felt most by shoppers. “More than me, the end user will have a huge impact.”

For more than three decades, New India Bazaar has been a cornerstone of San Francisco’s Indian community—weathering shifting demographics, recessions, and a pandemic. But with the new 50 percent tariff, owner Auro Bhatt told India-West, the store is facing a challenge unlike any before, one that’s driving up costs and squeezing margins.

“We certainly are feeling the impact of the tariffs,” he said. “Certain wholesalers, importers from India have already gone up to 50 percent higher than what we used to pay about four months ago.” 

Bhatt said they are absorbing part of the impact—about 15-20 percent depending on the product—and have limited price hikes to roughly 15 percent on select goods, far below the surge in import costs. “We haven’t raised prices across the board,” he said. “There are many products that we’re taking a hit on.”

Anticipating trouble, Bhatt stocked up on key essentials for the festive season before the tariffs took effect on shipments arriving after late August, hitting importers and retailers mid-cycle. 

For now, wholesalers are still supplying from pre-tariff inventory, but Bhatt expects sharper increases once that runs out. He worries, though, that rising prices will change shopping habits. “There’s going to be a saturation point that people can afford or cannot afford,” he noted. “If Indian wheat flour doubles in price, people will probably walk into Whole Foods and buy whatever just says ‘whole wheat’ on it.”

He fears that authenticity may be sacrificed for affordability. “Indian chilies are really Indian chilies. They have their own acids and heat, but they’re not as harmful as Serrano or jalapeños,” he said. “But eventually, if Indian chilies get too expensive or too hard to find, people will resort to some other alternative.”

He said many customers either aren’t aware of the tariffs or choose to ignore them, making it difficult to justify higher prices.

Having endured past disruptions, Bhatt said the pandemic taught him to stay adaptable. “We got a lot of Australian and Canadian dals instead of Indian dals,” he recalled. “If cardamom prices have gone up in India, then we’ll find another source.”

Through it all, Bhatt remains committed to his customers. “We’ve continued with all of our promotions like student discounts, loyalty programs, buy two get one free,” he said. “Some wholesalers have stopped honoring them, but we still do. Whatever we can do to help, we do.”

Sakhamuri said business owners like him have the leverage to negotiate with suppliers and “dictate terms” to some extent. But smaller, single-shop family businesses that rely on local distributors are struggling to survive.

One of them is Shanvi Indian Kitchen and Grocery in Alameda, owned by Vikas Aggarwal, who said the new tariffs have already reshaped his business—and not for the better.

“All Indian distributors have increased the price between $5 and $15 per case saying it’s because of a 25 percent tariff,” Aggarwal told India-West. “Right now, on one box of lentils, they charge me $10 extra. That’s a lot.”

That jump, he explained, is hurting both his profit margins and his customers.  “It’s affecting our income. We have fewer customers now, and they are spending less money,” he said. “…This is Diwali season, right? So people are still shopping but not like before.”

Customer frustration is also growing and competition from major grocery chains is adding to the strain. For now, he’s relying on leftover stock. “If they continue to increase prices, what can I do? I’m still selling at last month’s prices. We’re small convenience store…”

With margins thinning, he’s walking a fine line. “My margin is around 20-30 percent,” he said. “I try to keep it steady. If not, it affects my business. So for new items, I increase the price.”

Some distributors are sourcing from Canada to reduce tariff costs, he said, adding that small stores like his are on precarious ground. Big chains have their own trucks, distributors, and shipping networks, while small retailers depend entirely on local distributors.

“They’re the big fish and we’re the small fish,” he said. “We’re the ones most affected.”

Other retailers, too, are warning of a cascading impact on prices, profits, and consumer demand. Among them is Krutika Pranav, CEO of Highglow Jewelers, a retail chain with stores in Michigan, Atlanta, and Los Angeles.    

“Obviously the cost goes up exponentially,”  Pranav told India-West. “As a result, the cost to the customer also goes up. 50 percent is not a small amount when you apply those tariffs.”

Gold and silver prices are already soaring to record highs, magnifying the blow. “With the gold price being so high, and the tariffs on the entire amount—the gold and the labour included—it’s quite substantial,” she said.

While some of Highglow’s pieces are crafted domestically, a large portion still comes from abroad and are taxed differently.

Even with suppliers in Belgium and Dubai, India remains irreplaceable. “The artistry or the craftsmanship differs a lot from what is handmade in India,” she said. “For e.g., Jaipur, Rajasthan is known for its Jadau work. That type of work you can’t find anywhere else in India.”

For now, Pranav said, her company is doing its best to shield customers from the full brunt of the hikes. “We have been absorbing thus far,” she said. “But, as time goes on, it becomes increasingly difficult to do so…. It has to be a gradual process for the customer to be accustomed to it as well.”

Tariffs on Indian jewelry have surged from 5.5 to 50 percent, and even diamonds now face levies. “Before there were no tariffs,” she said. With Diwali and wedding season approaching, she’s bracing for a slower year. “Jewelry is not a necessity. It’s a luxury… You don’t see impulse buying anymore.”

The ripple effects, she warned, extend far beyond jewelry counters. “Tourism, hospitality, grocery, clothing, everyone is complaining that businesses are so dead,” she stated. “If a business is not profitable, you are laying off employees.”

Highglow has avoided layoffs so far, but Pranav called the 50 percent tariff untenable. “Such a high rate even in the short term is unsustainable. If tariffs stay in place long term, it’s going to be devastating for consumers as well as businesses,” she said. “When businesses start closing down, what happens? Economy tanks. Completely.”

For Arpita Bagri, founder and CEO of Spundann, a popular Bay Area-based festive/home decor store, the impact is immediate and deeply personal. 

“We have paid 50 percent already on three shipments that have come in,” she told India-West, estimating the added cost at “about $10,000 plus.”

While her shipments have arrived on time, and her shelves remain stocked, the financial blow has been steep, she told India-West. “Of course, the availability is there. Everything is same from a customer viewpoint. Only I’m being affected because I cannot increase the price suddenly. I’m consuming the price.”

The timing, she said, couldn’t have been worse. “It’s right in between the festive season… If we increase it, then how will it work? I mean, it’s not fair on the final customers,” she said. “And then we lose out on so many of them.”

The decision to absorb the cost has left her uncertain about the business’ financial outlook. “I am a super small business. I have put all my personal money this year into the business,” she said. “I don’t even know if this year I’m going to make a profit or a loss. I have no idea.”

With two stores—one in Milpitas and a newly opened location in Fremont, which was finalized before the tariffs took effect—and a warehouse to manage, she admitted she’s under tremendous pressure.

“Right now, I’m just doing my best to ensure more people come to the store, at least the sale increases. So there is less possibility of stock staying,” she said candidly. “We have our wings spread across two stores and a warehouse. And I have no idea where I am going to land after the season.”