India’s export market reels under U.S. tariff onslaught

India’s export engine has been jolted by the Trump administration’s sweeping tariff hikes, which have led to a sharp decline in shipments to the United States, the country’s largest export destination. According to the Global Trade Research Initiative (GTRI), India’s exports to the U.S. plunged 37.5 per cent between May and September 2025, sliding from USD 8.8 billion to USD 5.5 billion.

The steep fall, recorded for the fourth consecutive month, follows a series of U.S. tariff hikes under former President Donald Trump’s renewed “America First” trade policy that began in April 2025. The duties started at 10 per cent, rose to 25 per cent in early August, and were later doubled to 50 per cent by the end of the month, the final rate now in force on a wide range of Indian goods. The U.S., which accounts for nearly 18 per cent of India’s total merchandise exports valued at around USD 450 billion, has long been India’s largest trading partner. Trade analysts warn that the steep tariff escalation has exposed deep vulnerabilities in India’s export-driven sectors, threatening jobs, global competitiveness, and overall growth momentum.

Tech,* *p* *harma and* *m* *etals* *a* *mong* *w* *orst* *h* *it :

The GTRI report shows that smartphones and pharmaceuticals, two of India’s most prominent export success stories, have been among the worst casualties.

Smartphone exports, which had been growing rapidly until early 2025, collapsed by 58 per cent, falling from USD 2.29 billion in May to USD 884.6 million in September. Industry insiders attribute this to disrupted supply chains and shrinking U.S. demand due to higher import duties.

“The smartphone sector’s sudden fall is alarming. Exporters who had doubled capacity last year are now staring at unused inventories and tighter margins,” said Arvind Kumar, a senior analyst at TechTrade Global.

Pharmaceutical exports also slipped 15.7 per cent, from USD 745.6 million to USD 628.3 million. While the sector remains resilient due to strong U.S. demand for generics, higher tariffs have slowed shipments and increased costs.

Labour-* *i* *ntensive* *s* *ectors* *f* *ace* *j* *ob* *f* *ears :

Labour-driven sectors such as textiles, gems and jewellery, chemicals, agri-foods, and machinery, which together make up nearly 60 per cent of India’s exports to the U.S., recorded a 33 per cent decline over five months.

The gems and jewellery industry saw one of the steepest drops — a 59.5 per cent plunge from USD 500.2 million to USD 202.8 million. Factories in Surat and Mumbai have reported order cancellations and production cuts, with several units temporarily halting operations.

“This is devastation. A blanket tariff of this magnitude will inflate costs, delay shipments, and squeeze margins across the value chain,” said Kirit Bhansali, Vice Chairman of the Gem & Jewellery Export Promotion Council (GJEPC).

Similarly, textile hubs like Tirupur have begun to feel the strain, with exporters citing reduced orders and layoffs. “We’re scared of losing jobs. If factories cut workers, we’ll have nothing,” said a worker employed in one of Tirupur’s apparel units.

Industrial* *g* *oods* *s* *how* *r* *elative* *r* *esilience :

Exports of industrial metals and auto components saw a smaller 16.7 per cent fall, cushioned by the fact that U.S. tariffs were applied uniformly to all global suppliers.

Aluminium exports fell 37 per cent, copper 25 per cent, auto parts 12 per cent, and iron and steel 8 per cent. Experts say the downturn in this segment reflects weaker U.S. industrial demand rather than a direct loss of India’s competitiveness.

Solar and* *r* *enewable* *e* *xports* *l* *ose* *e* *dge :

The renewable energy sector has also suffered major setbacks. Solar panel exports plummeted 60.8 per cent, from USD 202.6 million to USD 79.4 million.

“With China facing 30 per cent tariffs and Vietnam just 20 per cent, India’s competitiveness has deteriorated sharply,” GTRI noted. “This undermines India’s efforts to become a key supplier of green energy hardware.”

Experts* *w* *arn of* *l* *ong-* *t* *erm* *c* *onsequences* *:

Economists and policy experts warn that the current downturn could have a long-lasting impact on India’s trade balance and manufacturing base.

Dr. Ajay Srivastava, Co-Founder of GTRI, said “The data makes one thing clear: tariffs have not only squeezed India’s trade margins but have also exposed structural weaknesses across key export industries.”

Nomura India recently revised its FY26 GDP growth forecast downward to 6 per cent, citing tariff-related disruptions and slower global demand. “India’s export slowdown could become a drag on overall growth unless offset by domestic consumption and government support,” Nomura’s research note said.

Calls for Government* *i* *ntervention :

Exporters and industry associations are urging the government to introduce emergency support measures to prevent widespread distress. Their demands include Enhanced interest equalisation support to reduce financing costs. Faster duty remission to ease liquidity pressures.Temporary credit lines for MSME exporters facing order losses.

“Exporters are struggling to stay afloat. If this continues for another quarter, we risk losing market share permanently to Vietnam, Mexico, and China,” warned Sanjay Mehta, President of the Federation of Indian Export Organisations (FIEO).

A* *w* *ake-* *u* *p* *c* *all for India’s* *e* *xport* *s* *trategy :

Experts agree that the crisis underscores the need for diversification beyond the U.S. market and greater investment in trade resilience. India’s dependence on a few key sectors and markets has made it vulnerable to sudden global policy shifts.

“The tariffs are a wake-up call. India must accelerate its trade diversification strategy and build alternative markets in Europe, Africa, and Southeast Asia,” said Dr. Rupa Chanda, Professor of Economics at IIM Bangalore.

Unless Washington and New Delhi reopen trade talks or U.S. duties are relaxed, India’s export slowdown could deepen. The coming months will be crucial as both policymakers and exporters weigh how to cushion the blow from one of the sharpest trade shocks in recent history.