India's exports to the United States are falling as the high tariffs by the Trump administration start to erode Indian goods' competitiveness in America, a think tank GTRI said on Wednesday.
Imports to the US in August plunged by a steep USD 6.7 billion, down 16.3 per cent from July — the steepest monthly decline in 2025 — after US tariffs jumped to 50 per cent in late August, the report added.
In July, the exports had already dropped 3.6 per cent to USD 8 billion from June, after having declined 5.7 per cent in June, when the shipments dropped to USD 8.3 billion from May.
May 2025 had been the previous month of growth, with exports growing 4.8 per cent from April to USD 8.8 billion, after it had remained at USD 8.4 billion in April.
"Tariff rise exactly mirrors the sudden increase in tariffs," GTRI Founder Ajay Srivastava said.
He described how, until April 4, Indian goods were coming into the US at the normal MFN (most favoured nation) rates. From April 5, Washington imposed a broad-brush 10 per cent tariff, which did not initially deter trade since importers rushed to front-load orders — explaining the May rise in exports.
By June, though, the persistent 10 per cent duty and country-specific measures talk started "deteriorating India's price competitiveness," Srivastava said, mentioning that consumers began switching to other suppliers, and this caused a near 6 per cent decline in shipments.
"The decline deepened in July under the same tariff regime," he said.
The worst hit was in August when duties increased to 25 per cent on August 7 and further doubled to 50 per cent on August 27 for the majority of goods.
"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 per cent rate," he said.
He also pointed out that roughly one-third of India's exports, such as pharmaceuticals and mobile phones, are tariff-free, so the real hit to tariff-hit goods is far greater than aggregate numbers show.
Labour-intensive sectors like clothing, gems and jewellery, leather, prawns, and carpets are under severe pressure, since the US takes between 30-60 per cent or more of their entire shipments abroad, he added.
As per GTRI estimates, if the 50 per cent tariffs persist until FY 2026, India may lose USD 30-35 billion in exports to the US — a big blow, given that the US accounts for almost 20 per cent of India's goods exports.
"Without quick relief, the prolonged tariff wall could lead to job losses and weaken its overall trade performance heading into 2026," he said.
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