NextFin news, India’s merchandise exports to the United States plunged dramatically by 37.5% over the five-month period from May to September 2025, marking one of the fastest and steepest export contractions in recent trade history, according to the Global Trade Research Initiative (GTRI). The downturn corresponded with the Trump administration’s sharp escalation of tariffs on Indian goods, which began with a 10% duty in April 2025, accelerated to 25% by early August, and surged to 50% by the end of August, impacting a wide array of Indian export categories.
The export value dropped from $8.8 billion in May to $5.5 billion in September alone, highlighting a broad-based impact felt across major sectors. Notably, labor-intensive and high-value categories such as smartphones and electronics saw exports fall by 58%, pharmaceutical shipments declined nearly 16%, while gems and jewelry exports dipped by almost 60%. Other affected sectors included apparel and garments (down 37%), home textiles (down 16%), chemicals, agricultural produce, machinery, marine products, and solar panels, with solar exports collapsing by nearly two-thirds—from $202.6 million to just $79.4 million within months.
Ajay Srivastava from GTRI explained to media outlets that the phenomenon is less about diminishing competitiveness of Indian goods and more attributable to softer industrial demand in the US combined with uniform tariff penalties that apply equally across foreign suppliers. The escalating tariffs have effectively introduced a ‘trade shock’, severely constraining India’s access to its largest export market.
This trade contraction poses significant implications for the Indian economy. The sharp declines in sectors like textiles, chemicals, and agro-foods—which collectively account for around 60% of India’s US exports—expose deep structural weaknesses. The tariffs have not only eroded trade margins but also intensified liquidity pressures on exporters. GTRI warns that if tariff levels persist, India may face a $30–35 billion annual loss in exports to the US over the coming year, risking the erosion of market shares to competitors such as Vietnam, Mexico, and China.
The geographic and sectoral breadth of the export decline, coupled with tariff hikes implemented under President Donald Trump’s protectionist trade policy, indicates a shift towards more nationalist trade strategies by the US administration inaugurated earlier this year. For India, this development necessitates urgent government intervention, including emergency credit lines, accelerated duty refunds, and targeted support for exporters to mitigate the liquidity crunch and stabilize affected industries.
The data also points to a changing trade landscape in which tariff barriers amplify vulnerabilities in labor-intensive manufacturing and emerging high-growth sectors like electronics, which had been recent bright spots. The shrinking exports of traditional strength areas like garments and home textiles underscore the challenge faced by sectors reliant on low-cost production in retaining competitiveness in tariff-heavy environments.
Looking forward, India’s export strategy must pivot towards diversification of markets and product lines, alongside strengthening supply chain resilience. The reliance on the US as a primary destination illustrates the risk of overexposure to unilateral trade policy shifts. Enhancing bilateral negotiations and forging deeper ties with alternative markets will be critical to offsetting losses and sustaining growth.
Moreover, India’s policymakers face the challenge of fostering more value-added, technologically advanced exports that can better withstand global tariff shocks. Increasing investment in innovation, upgrading manufacturing processes, and improving product quality could help Indian exporters regain footing in competitive markets.
In conclusion, India’s sharp export fall to the US under Trump-era tariffs highlights the precarious balance between geopolitical trade agendas and global commerce dynamics. The short-term economic impacts are already severe, but the long-term response will define India’s ability to navigate protectionism while sustaining export-driven growth in an evolving international trade environment.
According to The Week and corroborated by reports from the Global Trade Research Initiative, the breadth and speed of this export decline represent a significant trade disruption demanding strategic realignment by Indian industry and government actors alike.
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