India Exports Plummet 37.5% as US Tariffs Escalate Pressure on Trade Relations Under Trump Administration

Listeners, welcome to today’s episode of India Tariff News and Tracker. We are bringing you the latest on how US tariff policy under President Donald Trump continues to shake up India’s trade landscape, impact critical industries, and influence the future of US-India economic relations. Between May and September 2025, India’s exports to its largest market, the US, plunged 37.5 percent—down from $8.8 billion to $5.5 billion. This marks one of the sharpest short-term collapses in years, according to the Global Trade Research Initiative. The fallout: intensive tariff hikes that began at 10 percent in April, jumped to 25 percent by August, and hit 50 percent by late August for a range of Indian goods. Sectors like smartphones and pharmaceuticals saw spectacular declines, with smartphone exports collapsing 58 percent between May and September. Free-trade products, which make up a third of India’s shipments, contracted 47 percent in just five months. This signals a dramatic change in competitiveness, especially as US tariffs on Chinese imports now stand at 30 percent and Vietnam faces just 20 percent, giving those countries a head start over India in key export sectors. According to India Today’s analysis of the 2025 Busan APEC summit, President Trump and China’s Xi Jinping struck a tactical truce with a rollback of tariffs and a new deal on rare earth exports. While China saw relief—US tariffs dropped from 57 to 47 percent and Chinese firms reclaimed American market share—India found itself on the sidelines. The summit exposed a strategic disadvantage for New Delhi: with Trump focused on bilateral gains with Beijing, US tariffs on India stayed high and India’s previous positioning as a supply chain alternative suffered. The disruptions have been felt most acutely in labor-intensive sectors: textiles, auto parts, pharmaceuticals, and electronics. Rajan, India’s former central bank governor, argues that while developed economies like Japan have secured tariff deals in the 10-15 percent range, India faces rates as high as 50 percent. He warns against making “onerous” promises for temporary relief, urging India to act swiftly to protect its place in global supply chains. There may be hope on the horizon. The Indian government and the Trump administration have hinted at talks for a framework trade agreement, potentially reducing punitive tariffs to around 15 percent. But, as Firstpost points out, until signatures are on the dotted line, volatility is the status quo. For now, Indian exporters are pressing for emergency credit, faster duty remission systems, and additional support to prevent further market share erosion to China, Vietnam, and Mexico. Meanwhile, Trump’s broader vision centers on an “America First” agenda, treating economic alliances as highly transactional. The Supreme Court is reviewing Trump’s authority to impose these tariffs under IEEPA, a ruling that could transform presidential trade powers or roll back “Liberation Day” taxes that This content was created in partnership and with the help of Artificial Intelligence AI.