Archive · 2 Nov 2025
US Tariffs Cause Steep Decline in Indian Exports
Imagine India sells toys and other goods to the United States.
Recently, the United States put a big tax, called a tariff, on many of these goods.
This tax started small and grew very large, up to 50%.
Because of these high taxes, the amount of goods India has been able to sell to the US has dropped a lot, by more than a third in just a few months.
Some items, like phones and medicines, were hit the hardest, with their sales to the US falling by more than half.
Even though some of these items didn't have taxes before, they are now struggling.
Other countries like Thailand and Vietnam, who have lower taxes, are now selling more to the US instead of India.
This shows that high taxes can make it very hard for one country to sell its products to another.
India's exports to the US decreased by 37.5% between May and September 2025.
The decline is attributed to US tariffs, which reached a peak of 50% on Indian goods.
Smartphones and pharmaceuticals experienced the most significant drops in exports, falling 58% and 15.7% respectively.
Products previously exempt from tariffs saw a 47% decline in exports.
Other Indian exports like gems, jewelry, and solar panels also faced substantial decreases, losing market share to countries with lower tariffs.
- Who
- Global Trade Research Initiative (GTRI)
- What
- India's exports to the US declined by 37.5% across all sectors, with specific sharp drops in smartphones and pharmaceuticals, due to US tariffs.
- When
- May to September 2025
- Where
- India's exports to the United States
- Why
- Imposition of US tariffs, reaching up to 50% on Indian goods, partly as retaliation for India purchasing Russian oil.
US Actions
Impact on India
Tariff Implementation
US Actions
Implemented escalating tariffs on Indian exports, reaching 50%, partly as a response to India's purchase of Russian oil.
Impact on India
Experienced a significant collapse in exports, with a 37.5% overall decline and specific sharp drops in key sectors like smartphones and pharmaceuticals.
Competitiveness
US Actions
Instituted tariffs that, according to GTRI, have squeezed India's trade margins and exposed structural vulnerabilities.
Impact on India
Lost competitiveness against countries like Thailand and Vietnam, which face lower tariffs (20-30%) and are capturing lost US orders.
Sectoral Impact
US Actions
Tariffs disproportionately affected previously tariff-free products, leading to a 47% drop in their exports.
Impact on India
Labor-intensive sectors experienced a 33% decline, while gems and jewelry exports plummeted by 59.5%.
- Export Decline Period
- May to September 2025
- Overall Export Value Decline
- 37.5%
- Export Value (May 2025)
- $8.8 billion
- Export Value (September 2025)
- $5.5 billion
- Highest Tariff Rate on India
- 50%
- Smartphone Export Decline
- 58%
- Pharmaceutical Export Decline
- 15.7%
- Gems and Jewellery Export Decline
- 59.5%
Sources
UPSC Key: India-US defence partnership, MGNREGS, and India’s projected GDP
From importer to exporter: India’s Defence exports soar to ₹23,622 crore
India-US defence deal: Washington must realise benefits of Delhi's strategic autonomy