India exports to US plunge, marking one of the steepest declines in recent years, as President Donald Trump’s administration enforces sweeping 50% tariffs on Indian goods. The penalties, which came into effect on 27 August 2025, have triggered a 20% drop in September alone and nearly 40% over the past four months, reshaping the trade dynamic between the two countries.
According to official trade data, the US — India’s largest export market — has become the most severely affected destination since the tariff escalation began. The levies, which include an additional 25% penalty on India for continuing to import oil from Russia, have hit multiple key sectors, particularly those dependent on manual labour and export value chains.
Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), told BBC News that “the US has become India’s most severely affected market since the tariff escalation began.” The GTRI report highlights that textiles, gems and jewellery, engineering goods, and chemicals are among the hardest hit, reflecting the impact on India’s manufacturing and employment-heavy industries.
Export Collapse Across Sectors
Between May and September 2025, shipments to the US fell by 37.5%, dropping from $8.8 billion (£6.5 billion) to $5.5 billion, according to GTRI. This marks four consecutive months of export decline, exacerbating concerns about India’s trade deficit, which widened to a 13-month high of $32.15 billion in September.
The export shock has also rippled through India’s domestic economy, affecting small and medium-sized enterprises (SMEs) that rely heavily on US demand. Sectors such as garments, shrimp exports, and jewellery have been especially vulnerable, as these products face steep import duties and reduced competitiveness in the American market.
However, some of the decline has been partially offset by improved trade performance with countries like the United Arab Emirates (UAE) and China, where export volumes have risen. Analysts say this diversification offers temporary relief but cannot fully replace the scale of the US market.
Negotiations Under Pressure
Trade negotiations between India and the United States resumed last month after being stalled for several months due to policy disagreements. An Indian delegation is currently in Washington, aiming to finalize a new trade agreement by next month, according to sources familiar with the talks.
Despite ongoing dialogue, significant sticking points remain. The United States continues to push for greater access to India’s agriculture and dairy sectors, which Washington views as major untapped markets for American producers. India, on the other hand, has resisted liberalization in these sectors, citing food security concerns, rural livelihoods, and the protection of millions of small farmers.
In a recent statement from the White House, President Trump said that Indian Prime Minister Narendra Modi has agreed to halt oil purchases from Russia, a move aligned with Washington’s strategy to economically isolate the Kremlin amid the ongoing Ukraine war.
The Indian foreign ministry, however, described the discussions as “ongoing,” adding that the US had “shown interest in deepening energy cooperation with India.” This indicates that while diplomatic channels remain active, the broader economic and strategic relationship is under significant strain.
Wider Economic Implications
The tariffs have cast a shadow over what was once a thriving trade relationship. In 2024, bilateral trade between India and the United States reached $190 billion, making the US India’s largest trading partner. The Trump-Modi administrations had even set a joint target of $500 billion in trade — a figure now far from reach under the current policy tensions.
Economists warn that continued tariff escalation could have long-term repercussions for India’s export growth, employment, and global competitiveness. Many Indian exporters are reportedly holding shipments or seeking alternative markets in Europe, the Middle East, and Southeast Asia to mitigate losses.
“The US tariffs have disrupted supply chains that took decades to build,” says trade policy analyst Meera Sharma. “If these duties remain, India will need to restructure its export strategy to reduce dependence on a single major market.”
A Balancing Act for India
As global economic pressures mount, India finds itself walking a delicate diplomatic line. On one side, it seeks to preserve strategic ties with the United States, a key defense and technology partner. On the other, it must manage its energy security and economic partnerships with countries like Russia and China.
The coming weeks are expected to be critical for India-US trade negotiations, as both nations weigh the economic and political costs of continued friction. Observers say that the outcome could reshape global supply chains and redefine the future of India’s export-led growth model.
For now, the data paints a sobering picture: India’s exports to the US have plunged to multi-year lows, and the path to recovery will depend on how quickly both governments can find common ground — balancing protectionism with partnership in an increasingly polarized global economy.
Source: BBC News
