Trump Tariffs Drag Down India’s US Exports by 9% in October

Export Decline

· India’s goods exports to the US fell 9% in October 2025 year-on-year, following a 12% decline in September.

· Exports slipped to $6.3 billion (from $6.9 billion last year).

· Overall exports dropped 11.8% to $34.38 billion, while imports surged to a record $76.06 billion, creating a record trade deficit of $41.68 billion.

· India’s trade surplus with the US shrank 54%, from $3.17 billion in April to $1.45 billion in October.

Sectoral Impact

· Engineering goods: down 16.71%.

· Textiles & apparel: down 8.34%.

· Gems & jewellery: down 25%.

· Electronics: up 25% (helped by exemptions).

· Labour-intensive sectors hit hardest; pharmaceuticals and electronics held steady.

Tariff Details

· US imposed 50% tariffs in August 2025, comprising:

o 25% penalty for buying Russian oil.

o 25% universal tariff.

· Tariffs made Indian goods uncompetitive compared to ASEAN and China.

Policy Measures in India

· Export Promotion Mission: ₹25,060 crore outlay to sustain orders.

· Credit facilities: Additional ₹20,000 crore for exporters.

· RBI relief: Four-month moratorium (Sept–Dec 2025), extended export credit tenors to 450 days, relaxed asset norms.

· Regulatory easing: Revoked 14 QCOs on chemical intermediaries and 7 QCOs on copper/aluminium to help MSMEs.

Trade Deal Prospects

· India has sent its final proposal to the US; reciprocal tariff package near closure.

· Trump signaled tariffs on India will be reduced substantially, with a trade deal announcement expected soon.

· India’s LPG import deal with the US (2026) seen as part of balancing trade, though not tied directly to negotiations.

Key Takeaway

Steep US tariffs have sharply reduced India’s exports, especially in labour-intensive sectors, widening the trade deficit. India is responding with export promotion, credit relief, and regulatory easing, while a US–India trade deal is in advanced stages and expected to lower tariffs, potentially stabilizing trade flows.

[ABS News Service/18.11.2025]

India’s goods exports to the US fell nine per cent year-on-year in October, on top of a 12 per cent y-o-y decline the previous month, owing to US President Donald Trump’s steep 50 per cent tariffs that took effect in August.

Exports from labour-intensive sectors, such as engineering goods and textiles, slowed sharply in October as the US tariffs, the highest globally, left Indian goods uncompetitive compared to key competitors — particularly the Association of Southeast Asian Nations (ASEAN) countries and China

Official data released Monday showed that India’s goods exports to the US slipped 8.6 per cent to $6.3 billion in October compared to $6.9 billion in the same month last year.

This had an effect on overall goods exports which plunged 11.8 per cent to $34.38 billion. A commensurate jump in imports to a record $76.06 billion, partly driven by gold and silver imports, resulted in a record high trade deficit of $41.68 billion.

India’s trade surplus with the US, meanwhile, shrank 54 per cent from $3.17 billion in April to $1.45 billion in October.

Experts said exports of labour-intensive goods would have taken the biggest hit owing to weak margins. Shipments of exempted items, such as pharmaceutical and electronics goods, may have held on to their share in the US market, they said.

Product-wise data of exports to the US is yet to be released. Overall exports of engineering goods in October plunged 16.71 per cent. Also seeing a decline were exports of textile and apparel (8.34 per cent), and gems and jewellery (25 per cent). Overall electronics exports, however, jumped 25 per cent.

Commerce Secretary Rajesh Agarwal said Indian exporters have managed to hold on to the US market and that exports would improve in November as the Export Promotion Mission and measures to boost manufacturing take effect.

Despite the trade-related headwinds, Agarwal said India’s total goods and services exports are up four per cent in the first 7 months of the financial year.

On the trade agreement being negotiated by India and the US, an official said: “One part of the negotiations will take time. The other part is a package that can address reciprocal tariffs. We are working on both aspects. The package that can address reciprocal tariffs is more or less near closure, and we should get it soon.”

The 50 per cent tariffs imposed by Trump include a 25 per cent penalty for buying Russian oil and a 25 per cent universal tariff.

The trade deal will be announced on a mutually agreed date by both countries, the official said.

On India’s state-run oil companies signing a one-year deal to import LPG from the US in 2026, the official said: “It was something in the works for long. This is in the overall context of keeping the trade with the US. It is not part of any negotiations package per se, but definitely as part of our endeavour to balance trade with the US.”

Policy measures

In the face of the steep US tariffs, which kicked in on August 27, the Union Cabinet had last week cleared the Export Promotion Mission, announced in the Budget, with an outlay of Rs 25,060 crore to help sustain export orders. The government also extended additional credit facilities of up to Rs 20,000 crore to exporters.

Looking to ease debt repayment pressures on certain exporters hit by US tariffs, the Reserve Bank of India announced a four-month moratorium on loans and interest payments from September 1, 2025 to December 31, 2025. The RBI last week also extended export credit tenors to 450 days and relaxed asset classification norms, which would ease the payment burden.

Several ministries have also begun revoking quality control orders that have been hurting Medium and Small Enterprises in particular. In just the last week, 14 QCOs on chemical intermediaries that play a crucial role in the textile value chain were rolled back, and 7 QCOs on key industrial input items such as copper and aluminium were also revoked.

Trade deal likely

Government officials have said that India has sent its final proposal to the US and is awaiting Washington’s response. Commerce Minister Piyush Goyal had earlier this year said that the US will play an important role in India’s energy security going forward.

US President Donald Trump last week said that the US will bring down tariffs on India, and that Washington and New Delhi are close to signing a trade deal. The deal with India is in focus as the US has already signed an agreement with China, lowering tariffs to 47 per cent.

“Right now, the tariffs are very high on India because of the Russian oil, and they have stopped doing the Russian oil… It’s being reduced very substantially. We will bring the tariffs down at some point,” Trump said during a White House press briefing.