Impact of Trump Tariffs: India’s Exports to the US Decline 28.5% in Five Months, Key Sectors Affected
India’s exports to the United States have experienced a significant decline over the past five months, primarily due to the U.S. government’s decision to increase import tariffs on Indian goods. The tariffs, which have risen from 25% to 50%, have led to a staggering 28.5% drop in exports, falling from $8.83 billion in May 2025 to $6.31 billion by October 2025. This downturn follows a series of tariff hikes initiated in April, with the latest increase attributed to allegations against India regarding its support for Russia amid the ongoing conflict in Ukraine.
Impact of Tariff Increases on Export Categories
The Global Trade Research Initiative (GTRI) has categorized India’s exports to the U.S. into three main groups, each affected differently by the tariff increases. The first category includes tariff-free goods such as smartphones, medicines, and petroleum products, which accounted for 40.3% of exports in October. Despite being tariff-free, these exports still saw a decline of 25.8%, dropping from $3.42 billion in May to $2.54 billion in October.
The second category consists of goods facing the same tariffs as other countries, including iron, steel, aluminum, copper, and auto parts. This group represented 7.6% of exports in October and experienced a 23.8% decrease, from $629 million to $480 million. The most severely impacted category includes labor-intensive goods subjected to the 50% tariff, which constituted 52.1% of exports in October. This segment suffered the largest decline of 31.2%, plummeting from $4.78 billion to $3.29 billion, resulting in a loss of nearly $1.5 billion in just five months.
Declines in Key Export Products
Among the most affected products, India’s smartphone exports, which are the country’s leading export to the U.S., fell by 36%, decreasing from $2.29 billion in May to $1.50 billion in October. Monthly exports fluctuated significantly, peaking at $2 billion in June before dropping to $964.8 million in August and then recovering slightly to $1.5 billion in October.
Pharmaceutical exports also saw a minor decline of 1.6%, while petroleum products experienced a more substantial drop of 15.5%, from $291 million to $246 million. Additionally, exports of motor gasoline fell to zero, highlighting the severe impact of the tariff hikes. The GTRI report indicates that the overall decline in exports is not limited to tariff-free goods but extends across various sectors, including textiles, chemicals, and agriculture.
Challenges for Labor-Intensive Industries
Labor-intensive industries have been particularly hard hit by the tariff increases. Exports of gems and jewelry fell by 27.3%, dropping from $500.2 million to $363.8 million. Traditional gold jewelry exports decreased by 15.9%, while diamond-studded jewelry saw a decline of 19.3%. The most significant drop occurred in the category of cut and polished diamonds, which plummeted by 28.7%.
The solar panel sector faced a staggering 75.7% decline, with exports falling from $202.6 million to just $49.2 million. This decline has allowed competitors from China and Vietnam, who face lower tariffs, to capture a larger share of the market. The textiles and garments sector also suffered, with exports decreasing by 31.9%, from $944 million to $643 million. Many manufacturers are now rerouting orders to countries like Bangladesh and Vietnam, leading to job losses in production hubs across India.
Government Response and Future Outlook
In light of these challenges, the GTRI has urged the Indian government to take immediate action to support exporters. They recommend the swift implementation of the export promotion mission announced earlier this year, which has yet to see any concrete schemes put into action. Additionally, the GTRI suggests that India should advocate for the removal of the additional 25% tariff imposed by the U.S. This rollback could significantly alleviate the burden on sectors such as textiles, leather, gems and jewelry, and pharmaceuticals.
As the situation evolves, the Indian government faces pressure to address these tariff-related challenges effectively. The outcome of these efforts will be crucial for restoring India’s export competitiveness in the U.S. market and mitigating the adverse effects on its economy.
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