That’s why, in September, India’s goods exports to the U.S. fell off a cliff, plunging 20%. This steep drop is a testament to the trouble India now encounters from tariffs recently attached. India’s exports to the US have nose dived by almost 40% in the last four months. This really bad drop is the continuation of a movement that has significantly increased our trade deficit, which reached a 13-month high of $32.15 billion in that same time.
Washington’s 50% tariffs on Indian goods went into effect on August 27th. The first full month of these tariffs have completely ruptured U.S.-China trading relations. Shortly after the announcement, in September, India’s exports to the US dropped by a third. They plummeted from $8.8 billion in May to a mere $5.5 billion, a jaw-dropping 37.5% collapse. The US continues to be India’s largest foreign market and trading partner, with bilateral trade having hit $190 billion in 2024. The spike in trade curtailment due to the recent tariff escalation has been massive.
Experts highlight the situation’s severity. Ajay Srivastava, from the Global Trade Research Initiative (GTRI), stated, “US has become India’s most severely affected market since the tariff escalation began.” Exports have been falling for 6 months in a row. This downward trend has resulted in a record four consecutive months of shrinking trade volume between India and the US.
The two countries are currently negotiating a trade deal. The two governments are currently racing to finalize an agreement by the end of next month. An Indian delegation is actively participating in discussions in the US, addressing various trade issues, including greater access to India’s farm sector. The US government views India’s agricultural market as a significant untapped opportunity, prompting discussions on how to facilitate access while respecting India’s interests in food security and small farmers’ livelihoods.
The recent slump in exports to the US has been hugely problematic. Fortunately, stronger bilateral trade relations with other advanced and emerging economies have assisted in mitigating the damage as we’ll see in a second. Second, India has a huge trade deficit, particularly with countries such as the UAE—and increasingly with China. This export boom has largely cushioned the impact from cratering exports to its biggest trading partner.
With trade talks ongoing and heavy lobbying directed at finding solutions to bilateral trade disputes, the economic scene in India continues to be watched closely. How these negotiations play out will determine whether India is able to turn around its present trajectory. That’s why they are crucial to bringing back India’s lost export volumes to the US.