Trump's 90-Day Tariff Pause a Lifeline or a Test For Indian MSMEs? Whether Indian MSMEs use the 90-day tariff pause to rethink, realign, and reinforce their global footprint will determine if they merely survive the next wave of trade disruption or emerge stronger from it.

In a political season defined by economic brinkmanship, Donald Trump's 90-day tariff pause has offered a narrow but critical window for Indian micro, small and medium enterprises (MSMEs) to breathe. While the U.S. President's proposed return to protectionist policies has rattled global trade nerves, the temporary halt from steep tariff hikes, especially the jump from 10 per cent to 26 per cent, has triggered an urgent recalibration across India's export-driven industries.

For Indian MSMEs, who accounted for nearly 49 per cent of the country's exports in FY24, this isn't just a momentary sigh of relief, it's a flashing red light. The U.S. remains India's top export destination, soaking in roughly 18 per cent of total merchandise shipments. But with Trump's tariff threats looming like a sword over bilateral trade, industry experts are unanimous: overdependence is a risk India can no longer afford.

"The 90-day pause has allowed India some much needed breathing room," said Akshay Chinchalkar, head of research at Axis Securities. "The baseline, flat tariff rate of 10 per cent is still applicable, but this window can help further negotiations with the US government. For Indian MSMEs, the impact will be a lot more muted at 10 per cent compared to what it would have been at 26 per cent, and they can use this period to strategically tap other markets... and increase their product portfolio."

Dhiraj Jha, CEO, Satin Finserv Ltd also echoes this sentiment, "Many regions offer trade-friendly environments with relatively relaxed export regulations, making it easier for first-time Indian exporters to enter new markets. Countries such as Australia, Singapore, the United Arab Emirates (UAE), and several ASEAN nations—including Malaysia, Thailand, and Vietnam—have established free trade agreements and economic cooperation frameworks with India, facilitating smoother trade relations. "

The message is to leverage the pause, but not assume it signals stability. The global trade environment is shifting, and Indian businesses must follow suit. Chinchalkar bluntly stated, "The first thing Indian MSMEs must do is think beyond the US... This is the time when one needs to sit across the drawing board and identify markets where the potential for growth over the long-term is clearly visible."

Sectors like auto components, textiles, and light engineering of India's MSME exports are particularly exposed. Lancy Barboza, managing director, Flomic Global Logistics Ltd., sees the pause as more tactical than transformational. "This is not a policy shift—it's a tactical pause," he warned. "Logistics firms can now optimize container bookings and reduce freight rate fluctuations, but exporters must remain vigilant. The real opportunity lies in using this breather to streamline supply chains and hedge against future tariff risks."

Barboza's firm has already noticed a spike in inquiries for new geographies. And with infrastructure like Indian ports, dedicated freight corridors, and trade agreements such as CEPA bolstering outbound logistics, expansion doesn't have to come at a prohibitive cost. "MSMEs that pivot now can build trade resilience and stay one step ahead of geopolitical shocks," he added.

For companies that have built their identities around niche manufacturing and innovation, like Wol 3D India Ltd., the pause could be a launchpad. "This scenario may also turn out to be a turning point for the larger MSME industry," said Rahul Chandalia, co-founder & director at the 3D printing firm. "With the right blend of innovation, adaptability and strategic partnerships the opportunity is apt for Indian MSMEs to turn these challenges rather into long-term growth opportunities."

But adaptation won't come from optimism alone. It will require hard choices, strategic investment, and new alliances. Konark Trivedi, founder & managing director at telecom manufacturing firm Frog Cellsat Ltd., believes the next three months must be treated like a wartime planning phase. "The shift in global sentiment provides India the opportunity to replace China as a key exporter to the U.S.," he said. "Indian MSMEs need to realign their supply chains, optimize pricing strategies, and proactively engage with U.S. buyers."

That opportunity, however, doesn't negate the imperative to diversify. "While the U.S. remains a key market, this development underscores the urgency of market diversification," Trivedi added. "India has the talent, capacity, and momentum to become a global manufacturing hub, not just for the U.S., but for the world."