India’s exports to the United States have sharply declined by 20% in September and nearly 40% over the past four months, as the Trump administration’s 50% tariffs on Indian goods took full effect. This downturn underscores the significant economic strain imposed by the new trade barriers, which include additional penalties linked to India’s energy purchases from Russia.
The 50% tariffs were implemented on August 27, 2025, as part of President Trump’s broader trade policy aimed at reshaping global trade dynamics. This measure includes a 25% surcharge specifically penalizing India for its continued oil imports from Russia, reflecting U.S. efforts to exert economic pressure on the Kremlin amid the war in Ukraine. The tariffs have escalated long-standing trade tensions between the two nations, which had been engaged in protracted negotiations for a bilateral trade agreement.
Data from the Global Trade Research Initiative (GTRI) reveals that India’s goods exports to the U.S. plummeted by 20% in September alone, the first full month under the new tariffs. Over the past four months, exports have fallen by nearly 40%, dropping from $8.8 billion in May to $5.5 billion in September. The U.S., which was India’s largest trading partner with bilateral trade reaching $190 billion in 2024, has now become the most severely affected market, according to Ajay Srivastava of GTRI.
Labor-intensive sectors have borne the brunt of the impact, including textiles, gems and jewelry, engineering goods, and chemicals. These industries, which rely heavily on U.S. demand, have suffered the heaviest losses, with the textiles sector alone exporting nearly $10.3 billion annually to the U.S. The decline threatens millions of jobs in India and highlights the vulnerability of export-dependent industries to sudden policy shifts.
The export slump has contributed to India’s trade deficit widening to a 13-month high of $32.15 billion in September, exacerbating economic challenges. However, some of the losses have been cushioned by improved trade with other partners like the UAE and China, indicating a shift in India’s trade strategy to mitigate the effects. This rebalancing effort underscores the broader global trade realignments triggered by protectionist measures.
Trade negotiations between India and the U.S. resumed last month after months of stalemate, with an Indian delegation currently in Washington aiming to conclude a deal by next month. In a recent development, Trump announced that Prime Minister Narendra Modi has agreed to stop buying Russian oil, a key U.S. demand that could ease tensions. A spokesperson for India’s foreign ministry confirmed ongoing discussions and U.S. interest in deepening energy cooperation.
Despite this progress, major sticking points remain, particularly over access to India’s agriculture and dairy sectors. The U.S. has long pushed for greater market entry, viewing it as a lucrative opportunity, while India has fiercely protected these sectors to safeguard food security and the livelihoods of small farmers. These disagreements have historically stalled negotiations and could complicate a final agreement.
The trade dispute and the ambitious target set by Trump and Modi to more than double bilateral trade to $500 billion highlight the high stakes involved. A successful deal could alleviate the export crisis and foster stronger economic ties, but the immediate fallout from the tariffs reveals the fragility of global trade relationships. As talks continue, the outcome will likely influence not only bilateral relations but also broader patterns of international commerce and economic resilience.