About one-third of Indian exports to the US face no tariffs, indicating that the actual impact on tariff-affected goods is significantly higher. (AI image) India’s exports to the US have fallen for the third straight month in August as Donald Trump administration’s 50% tariffs came into effect. According to Global Trade and Research Initiative founder Ajay Srivastava, the impact of the heavy tariffs is skewed with some sectors feeling severe pain.The sectoral effects are distributed unevenly. About one-third of Indian exports to the US, including pharmaceuticals and smartphones, face no tariffs, indicating that the actual impact on tariff-affected goods is significantly higher than aggregate statistics indicate, notes GTRI.
India’s Exports To US Decline
Exports to the US in August dropped substantially to $6.7 billion, registering a 16.3% reduction from July – marking the largest monthly decrease of 2025 – as US tariffs increased to 50% towards the end of the month.The July figures indicated a 3.6 percent reduction to $8.0 billion compared to June levels.June recorded a 5.7 percent reduction to $8.3 billion relative to May performance.May represented the final month of positive growth, showing a 4.8 percent increase over April to reach $8.8 billion. The April export value stood at $8.4 billion.According to GTRI, the export decline mirrors the progressive increase in duties from 10% to 50%. Prior to April 4, Indian exports to the US followed standard MFN duty structures.When the US implemented a broad 10% tariff from April 5, trade volumes initially remained stable, with importers accelerating their purchases, leading to increased exports in May.
US Softens as India Holds Firm: Ex-Diplomat Mahesh Sachdev Decodes Trade Talks Amid Tariff Threat
The continuous 10% duty and discussions about nation-specific measures began affecting India’s cost advantages by June, resulting in a nearly 6% reduction as buyers sought other suppliers. July witnessed further reductions whilst operating under identical tariff conditions, GTRI notes.August brought severe challenges when tariffs increased to 25% on August 7, followed by a rise to 50% on August 27. “This left little room for exporters to adjust, resulting in the sharpest month-on-month contraction yet. September is expected to show an even steeper fall, as it will be the first month fully exposed to the 50 percent rate,” warns GTRI.
US-India Tariff Escalation
Trump Tariffs Impact & Possible Job Losses
Industries such as apparel, gems and jewellery, leather, shrimp and carpets face substantial challenges, as their US market dependence ranges from 30-60% of their total global exports.GTRI projections indicate that sustained 50% tariffs until FY2026 could result in India losing $30-35 billion in US exports, representing a significant setback given that the US comprises nearly 20 percent of India’s merchandise exports.Industry associations are urging the Indian government for immediate intervention. Their recommendations include subsidised interest rates under the interest equalisation scheme, expedited duty reimbursements through export promotion programmes, and financial support to prevent widespread manufacturing unit closures.Despite the government’s reduction in GST rates across various products to stimulate consumption, specific measures targeting exports remain pending.“Without quick relief, the prolonged tariff wall could lead to job losses and weaken its overall trade performance heading into 2026,” GTRI says.
India-US Trade Deal Talks: Positive Signs
Following a constructive dialogue between Indian and American trade representatives on Tuesday, both nations have agreed to strengthen their endeavours towards establishing a bilateral trade agreement, indicating improved relations ahead.Over the past 10 days, alongside a conciliatory approach from US President Donald Trump, India’s principal negotiator Rajesh Agarwal and colleagues engaged with a USTR team headed by Brendan Lynch in extensive discussions, with internal sources indicating progress.”Acknowledging the enduring importance of bilateral trade between India and US, the discussions were positive and forward looking covering various aspects of the trade deal. It was decided to intensify efforts to achieve early conclusion of a mutually beneficial trade agreement,” said the commerce department following the significant meeting.According to TOI sources, future discussions will transition to online platforms, with both parties expected to confirm dates for the sixth round of negotiations, previously scheduled for August 25, but postponed due to tariff actions against India.The joint statement brings optimism to exporters hoping for US withdrawal of 50% tariffs on Indian products, which currently impacts domestic manufacturers. The US represents India’s primary export destination, with previous year’s shipments valued at $86 billion, of which 40-45% currently face elevated duties.