US Tariffs Hit Indian Exports, Widening Trade Deficit – Chinmaya IAS Academy

India’s merchandise exports to the United States witnessed a sharp decline following the imposition of steep tariffs by the US administration under Donald Trump.
The development has adversely affected India–US trade relations, contributing to a record-high trade deficit and raising concerns over India’s export competitiveness amid a global slowdown.

India’s goods exports to the US fell by 9% (YoY) in October 2025.
This followed a 12% year-on-year decline in September 2025, indicating a sustained downward trend.
The fall is linked to 50% tariffs imposed by the US, effective from August 2025.

India’s goods trade deficit widened to a record $42 billion in October 2025.
Overall exports declined by 12%, while imports surged to $76 billion.

Gold imports tripled to $14.72 billion, significantly driving the import spike.
Likely factors:
- Festive season demand
- Portfolio and hedging preferences amid global uncertainty

Sectoral Impact of Tariffs:
- Labour-intensive sectors most affected:
  - Engineering goods
  - Textiles and readymade garments
  - Gems and jewellery
- Higher tariffs reduced price competitiveness of Indian products in the US market.
Export Data (October 2025):
- Engineering goods exports fell 16.71% to $9.37 billion.
- Readymade garment exports declined by over 8%.
- Gems and jewellery exports dropped by over 26%.
Non-oil, non-gold imports rose by 12.4%, led by:
- Fertilisers
- Machinery
- Electronic goods
- Non-ferrous metals and silver
Structural Challenges:
- Rising logistics costs
- Volatile global input prices
- Weak global demand environment
Experts highlight the need to:
- Strengthen domestic supply chains
- Ensure timely availability of raw materials
- Improve cost efficiency to enhance export resilience
The episode underscores vulnerabilities in India’s export basket and the risks of protectionist trade policies.