India’s exports to US plunge! Not just goods hit by Trump’s 50% tariffs, even smartphones see ‘alarming’ dip; what’s happening?
US President Donald Trump’s 50% tariffs have led to a plunge in India’s exports to America, with the pain unevenly spread, according to a Global Trade and Research Initiative (GTRI) analysis. Incidentally, the decline has been across the board, and categories such as smartphones which are tariff exempt, have also seen a decline. India’s export engine to its largest market, the United States, is sputtering under the weight of tariff shocks, notes GTRI’s founder Ajay Srivastava. During the period from May to August 2025, goods exports to the US decreased substantially by 22.2%, declining from $8.8 billion to $6.9 billion. The decline has been continuous, corresponding with the US government's progressive increase in import duties - initially at 10% until early August, rising to 25% from August 7, and subsequently reaching 50% towards the month's end. “August data only partly reflects the impact of higher tariffs — India paid 10% tariffs until August 6, 25% until August 27, and 50% only after August 28. September will be the first full month where exports face 50% tariffs, meaning the declines in textiles, gems and jewellery, shrimp, chemicals, and solar panels could deepen further,” warns GTRI.
A comprehensive study by GTRI reveals varied impacts across sectors: certain duty-exempt products show unexpected declines despite having no tariffs, whilst several heavily-taxed categories demonstrate unexpected stability. This situation reflects a multifaceted scenario influenced by reduced demand, price elasticity and evolving American consumer behaviour, says GTRI. Products exempt from tariffs, constituting 28.5% of India's August exports, experienced a substantial decline of 41.9%, decreasing from $3.37 billion in May to $1.96 billion in August.
"Tariff-Exempt Exports Collapse is a Puzzle. It is alarming and counterintuitive — these products face zero US tariffs, yet they have seen the steepest decline. This demands urgent investigation to uncover the real reasons that are driving the fall," says GTRI. The products, like metals and auto components, experienced a relatively small decline of 4%, dropping from $630 million in May to $600 million in August.
The uniform application of tariffs across all suppliers has maintained India's relative competitive position. The observed reduction primarily stems from decreased US industrial demand rather than any loss in market position, says GTRI.
There has been a major impact on labour-intensive exports - a category that represents 62.7% of India's US exports. Exports decreased from $4.82 billion in May to $4.30 billion in August 2025, showing a 10.8% reduction primarily affecting labour-intensive sectors sensitive to price variations.
