India’s exports to U.S. falling owing to high tariffs: GTRI

“India’s exports to the U.S. are falling as high tariffs imposed by the Donald Trump administration have started eroding the price competitiveness of domestic goods in Washington,” think tank GTRI said on Wednesday (September 17, 2025).

“August shipments to the U.S. plunged to $6.7 billion, down 16.3% from July — the steepest monthly fall of 2025 — as the U.S. duties doubled to 50% by month’s end,” it said.

Surging merchandise exports, falling imports cut India’s August trade deficit by half

In July, exports dipped 3.6% to $8 billion over June. The month of June had also seen a decline of 5.7% to $8.3 billion over May.

May 2025 was the last month of growth, as shipments to the U.S. rose 4.8% over April to $8.8 billion. In April, exports to the U.S. stood at $8.4 billion.

“The slide in exports closely tracks the rapid escalation of tariffs,” Global Trade Research Initiative (GTRI) Founder Ajay Srivastava said.

Until April 4, Indian goods entered the U.S. at normal MFN (Most Favoured Nation) rates. “From April 5, Washington imposed a universal 10% tariff, which initially failed to dent trade flows as importers rushed to front-load purchases — explaining May’s export rise,” he said.

By June, however, the sustained 10% duty and growing talk of country-specific measures began “eroding India’s price competitiveness”, Mr. Srivastava said, adding orders shifted to alternative suppliers, pulling exports down by nearly 6%. “The decline deepened in July under the same tariff regime,” he said.

“The real blow came in August when the tariffs shot up to 25% on August 7, and then doubled to 50% on August 27, for most products,” he said.

“This left little room for exporters to adjust, resulting in the sharpest month-on-month contraction yet. September is expected to show an even steeper fall, as it will be the first month fully exposed to the 50% rate,” he said.

He also said that roughly one-third of India’s exports, including pharmaceuticals and smartphones to the U.S. are tariff-exempt, which means the effective hit on tariff-exposed goods is far deeper than headline figures suggest.

“Labour-intensive sectors such as apparel, gems and jewellery, leather, shrimp, and carpets are under severe stress because the U.S. accounts for 30-60% or more of their global exports,” he said.

According to GTRI estimates, if the 50% tariffs remain through the end of FY 2026, India could lose $30-35 billion in the U.S. exports — a major blow considering the U.S. accounts for nearly 20% of India’s goods exports. He suggested that the government should extend support measures to exporters.

“Without quick relief, the prolonged tariff wall could lead to job losses and weaken its overall trade performance heading into 2026,” he said.