India’s exports to US plunge 21% after Trump’s 50% tariff hike
India’s exports to the US fell 21% in September after Trump’s 50% import tax, prompting New Delhi to seek trade deals with Europe and the UK.
- Indian exports to the US plunged by 20.7% in September, the first full month after the new tariffs were implemented.
- The decline is a direct result of a 50% tariff hike by the Trump administration, which made Indian goods more expensive in the American market.
- The tariffs have eroded Indian suppliers' profit margins and prompted them to seek alternative markets in Europe and the Middle East.
According to Nikkei Asia, the United States’ tariff offensive has hit India’s exports hard, with shipments to the US plunging 20.7% in September from the previous month to US$5.44 billion. The month marked the first full period under Washington’s newly enforced import duties.
The 50% tariff hike made Indian goods more expensive in the American market, prompting buyers to demand discounts, which in turn eroded Indian suppliers’ profit margins.
Despite trade tensions with the US, India’s overall exports rose 3.64% month on month to US$36.38 billion. Imports also increased by 11.26% to US$68.5 billion, widening the trade deficit by 21.36% to US$32.15 billion.
Seeking new markets in the Middle East and Europe
As trade tensions with the United States escalate, Indian exporters are looking for alternative markets, particularly in the Middle East and Europe.
Pranjul Bhandari, chief India economist at HSBC, said new export orders rose at a faster pace in September, suggesting that demand outside the US may help offset the decline in American demand.
Strained ties between India and the US
India has been hit with a 50% tariff after the United States expressed dissatisfaction over New Delhi’s continued purchases of Russian oil — a move president Donald Trump described as “fueling the war machine” in Ukraine.
Relations between the two countries have grown increasingly tense, strained by both trade and political issues. India has resisted calls to curb imports of Russian crude and has declined to open its agriculture and dairy markets to US products, stalling trade negotiations.
However, there are signs of renewed dialogue. Last month, a US trade delegation led by Brendan Lynch met Indian commerce officials headed by Rajesh Agrawal in New Delhi to discuss ways to move talks forward.
India pushes ahead with global trade deals
In July, New Delhi signed a trade deal with the United Kingdom that includes tariff reductions on products ranging from textiles to whisky and automobiles, in exchange for greater market access for Indian businesses.
The pact aims to expand bilateral trade by around US$34 billion by 2040, following a separate business and investment agreement announced by both prime ministers earlier this month.
Meanwhile, India is also negotiating a free trade agreement with the European Union (EU), which it aims to finalise by the end of this year. The talks were revived in 2022 after nearly a decade-long pause.
According to the Indian Commerce Ministry, both sides have so far held 14 rounds of negotiations, with the latest taking place in Brussels last week.
