India’s Exports to US Set to Shrink by $5.76 Billion Amid Trump’s 26% Tariff Blow

India’s trade equation with the United States is facing a fresh challenge following Washington’s decision to impose a sweeping 26% reciprocal tariff. According to a report by the Global Trade Research Initiative (GTRI), this move could lead to a 6.41% contraction in India’s exports to the US in 2025, equating to a drop of $5.76 billion.

The announcement comes on the heels of an executive order signed by US President Donald Trump on 2 April, introducing new ad valorem duties ranging from 10% to 50%. While the 10% base duty took effect immediately, country-specific tariffs, including those targeting Indian goods, are set to be enforced from 9 April.

Major Export Categories to Bear the Brunt

GTRI’s report outlines that the most affected sectors include fish and crustaceans, which may see a drop of one-fifth in exports. Iron and steel products could fall by 18%, diamonds and gold items by 15.3%, vehicles and parts by 12.1%, and electronics and telecom goods by 12%.

Exports of plastics are expected to fall by 9.4%, carpets by 6.3%, petroleum products by 5.2%, organic chemicals by 2.2%, and machinery by 2%. Commerce and Industry Minister Piyush Goyal is also set to meet industry stakeholders to assess the impact and challenges faced by exporters.

Tariff Impact and Exemptions

While India’s competitive advantage in some areas, such as textiles, ceramics, pharmaceuticals, and inorganic chemicals, may help cushion losses, the broader picture remains concerning. Electronics and smartphone exports alone stood at $14.4 billion in 2024, with the US accounting for 35.8% of India’s global shipments in this segment. In 2024, India exported $89.81 billion worth of goods to the US.

“We estimate that the impact of the tariff hike (on electronics and smartphones) could reduce India’s exports to the US by 12%, or roughly $1.78 billion,” GTRI stated. Although petroleum, solar panels, and pharmaceuticals worth $20.4 billion have been exempted, the remaining $67.2 billion in goods will now face the full brunt of the new tariff.

Conclusion

With 74.8% of India’s exports to the US now subject to a 26% duty, the tariff shift marks a significant turning point in bilateral trade. While existing exemptions offer some breathing space, the broader impact could reshape India’s export landscape in the coming year.

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