India’s exports to the United States, its largest overseas market, have fallen sharply following the introduction of steep U.S. tariffs under President Donald Trump. Official data shows Indian goods exports dropped 20% in September alone and nearly 40% over the past four months, marking one of the most severe trade slumps between the two nations in decades.
The decline follows Washington’s decision to impose 50% tariffs on Indian goods starting August 27, which includes a 25% penalty over India’s continued purchase of Russian oil. The first full month under the new tariff regime revealed the impact across several of India’s key export sectors—textiles, gems and jewellery, engineering goods, and chemicals—all of which rely heavily on U.S. buyers. “The U.S. has become India’s most severely affected market since the tariff escalation began,” said Ajay Srivastava, co-founder of the Global Trade Research Initiative (GTRI), a Delhi-based think tank.
According to GTRI’s analysis, India’s shipments to the U.S. have dropped from $8.8 billion in May to $5.5 billion in September, a decline of 37.5%. This sharp contraction has contributed to India’s trade deficit widening to $32.15 billion—the highest level in over a year. Some of the losses, however, have been offset by stronger exports to countries such as the United Arab Emirates and China.
Trade talks between New Delhi and Washington have resumed after months of stalled negotiations, with both sides aiming to reach a deal by next month. The discussions come as President Trump announced that Prime Minister Narendra Modi has agreed to gradually halt purchases of Russian oil, part of Washington’s broader effort to tighten economic pressure on Moscow. India’s foreign ministry, meanwhile, confirmed that “energy cooperation discussions” with the U.S. are ongoing but said differences over agricultural and dairy market access remain unresolved.
The U.S. has long sought greater access to India’s protected farm sector, which New Delhi says is vital for food security and rural livelihoods. Despite trade friction, both governments have set ambitious goals—aiming to more than double bilateral trade from $190 billion in 2024 to $500 billion in the coming years. Whether that target survives the new tariff war remains to be seen as the world’s two largest democracies navigate one of their most challenging economic standoffs in years.
