India’s Exports to U.S. Fall Sharply as 50% Tariffs Hit Trade

India’s exports to the United States are witnessing a sharper downturn, with September marking the first full month under the 50% tariff regime imposed on key products by the Trump administration. According to a report by the Global Trade Research Initiative (GTRI), the impact is now spreading beyond tariffed categories, raising fresh concerns for policymakers and exporters.

Full Tariff Impact Visible in September

The GTRI report explained that August trade figures only partially reflected the tariff increases, as duties were raised in stages—10% until August 6, 25% until August 27, and 50% after August 28. With September being the first month of uniform higher tariffs, the decline in exports of textiles, gems and jewellery, shrimp, chemicals, and solar panels is expected to deepen further.

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Data shows that India’s exports to the U.S. dropped nearly 14% month-on-month to U.S.D. 6.86 billion in August 2025, following the phased tariff hike. Category C exports—covering 62.7% of India’s shipments to the U.S.—fell 10.8% from U.S.D. 4.82 billion in May to U.S.D. 4.30 billion in August, with labour-intensive sectors most affected by the steep rise in costs.

Unexpected Decline in Tariff-Free Goods

More concerning is the decline in products that are not subject to tariffs. Tariff-free exports such as smartphones and pharmaceuticals, both central to India’s production-linked incentive (PLI) programme, have seen sharp contractions. These categories, which represented 28.5% of India’s August exports, fell 41.9%—from U.S.D. 3.37 billion in May to U.S.D. 1.96 billion in August. Analysts attribute this drop partly to frontloading, as companies shipped goods earlier to avoid higher tariffs, leading to weaker subsequent demand.

Calls for Government Support

Exporters and industry associations are urging the government to respond swiftly to mitigate the fallout. Recommended measures include interest subsidies under the Interest Equalisation Scheme, faster duty remission, and liquidity support to ease the burden on affected firms. While recent GST rate cuts aim to stimulate domestic demand, exporters stress that dedicated relief for overseas trade has yet to be announced.

Policy Outlook and Trade Talks

On the negotiation front, India is expected to take a firm stance in discussions with the U.S., particularly in sensitive areas such as agriculture, dairy, genetically modified feed, and regulatory sovereignty. Experts believe that balancing domestic priorities with international trade pressures will be crucial in the coming months.

Conclusion

India’s export slowdown to the U.S., driven by steep tariffs and an unexpected contraction in duty-free categories, highlights growing challenges for the country’s trade sector. With September set to reflect the full brunt of the tariff regime, swift policy intervention and targeted relief will be critical to safeguard competitiveness and sustain growth in key industries.