India-US exports slide sharply, then rebound despite higher Tariffs: GTRI

India’s exports to the United States traced an unusual two-phase trajectory between May and November 2025, plunging sharply mid-year before staging a partial recovery despite higher tariffs, according to an analysis by trade-focused think-tank Global Trade Research Initiative (GTRI). The pattern marks a clear departure from both last year’s performance and the broader trend of the past five years.

India’s shipments to the U.S. fell 20.7 per cent during the period, declining from $8.8 billion in May to $7.0 billion in November. The contraction was far steeper earlier in the year, with exports plunging 37.7 per cent between May and September to a low of $5.5 billion, before recovering by 27.3 per cent between September and November.

In contrast, exports during the same May-November window last year were relatively stable, showing only moderate month-to-month fluctuations and no comparable mid-year collapse. Over the past five years, India’s exports to the U.S. have typically followed a predictable seasonal pattern moderation during the summer months followed by a gradual build-up towards the year-end holiday season rather than the sharp drop-and-rebound cycle seen in 2025.

GTRI described this year’s trend as unusual, noting that the steepest fall occurred when U.S. tariffs on Indian goods were still relatively low, while a partial recovery took place after significantly higher tariffs came into effect.

“India’s exports fell more sharply during the low-tariff phase and then recovered partially under the higher-tariff regime. This pattern is unusual,” the think-tank said in its report.

According to GTRI, nearly 85 per cent of India’s exports to the U.S. in November came from sectors that experienced an initial decline followed by a rebound. Gems and jewellery illustrated this clearly, with exports plunging from $500.2 million in May to $202.8 million in September before rebounding to $406.2 million in November.

A similar two-stage movement was visible across electronics particularly smartphones machinery, vehicles and auto components, pharmaceuticals, textiles and garments, carpets, mineral fuels, organic chemicals, plastics, rubber articles, fish, dairy products, and edible fruits and nuts. Historically, many of these sectors have shown steady or incremental growth over the past five years, with occasional disruptions during global shocks, but not the synchronised slump recorded this year.

The report pointed out that exports declined between May and September even though tariff levels remained modest for most of that period. Tariffs stood at 10 per cent in May, June and July, remained at 10 per cent from August 1 to 6, rose to 25 per cent between August 7 and 27, and increased to 50 per cent only in the final days of August. September, the first full month under the 50 per cent tariff regime marked the lowest point for exports.

“Yet exports partly recovered between September and November, even though the 50 per cent tariff remained in place throughout that period,” GTRI noted.

By comparison, previous tariff-related disruptions over the last five years had typically resulted in a more linear slowdown, with exports either stabilising at lower levels or recovering only after tariffs eased. The 2025 rebound, while notable, came without any tariff relief.

The think-tank attributed the sharp fall between May and September to heightened uncertainty surrounding impending tariff hikes, which likely prompted U.S. buyers to delay fresh orders and draw down inventories rather than commit to new shipments.

“The drop between May and September likely reflected the shock and uncertainty created by impending tariff hikes, which led buyers to delay orders and run down inventories,” the report said. “Once the higher tariffs became certain, exporters and U.S. buyers began adjusting, absorbing part of the cost, renegotiating prices, and shifting toward less-affected or hard-to-substitute products.”

GTRI added that in sectors such as electronics and machinery, supply-chain realignments and inventory restocking ahead of the U.S. holiday season also supported shipments, helping exports recover from September lows. However, it cautioned that this rebound should not be mistaken for a return to the longer-term growth trend seen over the past five years.

“The rebound after September therefore reflects adjustment to a tougher tariff regime, not relief, and remains fragile, driven by short-term coping strategies rather than a lasting improvement,” the GTRI statement concluded.