US Tariffs Slash India’s Exports by 22%, But Global Markets Cushion the Blow

India’s merchandise exports recorded modest growth in January, but a sharp decline in shipments to the United States—triggered by steep tariffs—cast a shadow over overall trade performance.

According to official data, merchandise exports rose marginally by 0.61% to $36.56 billion in January. Imports, however, surged 19.2% year-on-year to $71.24 billion, significantly widening the country’s trade deficit to $34.68 billion for the month.

Despite the pressures, total exports of goods and services remain on track to cross $860 billion during the current financial year, Commerce Secretary Rajesh Agrawal said. For the April–January period, exports grew 2.22% to $366.63 billion.

Sharp Fall in Exports to the US

India’s exports to the United States fell 21.77% in January to $6.6 billion, largely due to the 50% tariffs imposed by the Donald Trump administration from August 27.

Under a recently concluded interim trade arrangement, the US has removed 25% penal tariffs from February 7, while reciprocal tariffs are expected to be reduced to 18% from 25%. These changes could help restore competitiveness for Indian exporters.

Imports from the US increased 23.71% to $4.5 billion in January.

For the April–January period of the fiscal year:

• Exports to the US rose 5.85% to $72.46 billion
• Imports grew 13.87% to $43.92 billion

Although exports had contracted in September, October, and December, they briefly rebounded in November with a strong 22.61% rise before declining again.

Trade With China and Other Markets

Exports to China surged 55.65% to $1.63 billion in January, while imports from China increased 16.67% to $12.23 billion.

For April–January:

• Exports to China rose 38.37% to $15.88 billion
• Imports expanded 13.82% to $108.18 billion

India also recorded export growth to countries such as the UAE, Netherlands, Germany, Saudi Arabia, Italy, Hong Kong, Spain, Belgium, Malaysia, and Vietnam. However, shipments to the UK, Bangladesh, Singapore, Australia, France, and Brazil declined.

On the import front:

• Imports fell from Russia, Iraq, Korea, Germany, Thailand, and Australia
• Imports increased from the UAE, Saudi Arabia, Switzerland, Singapore, Japan, and Indonesia

Gold imports from Switzerland saw a dramatic surge of 836.85% in January to $3.95 billion.

Signs of Market Diversification

The Global Trade Research Initiative (GTRI) highlighted that India’s export slowdown is primarily concentrated in shipments to the US rather than indicating a global downturn.

Between April 2025 and January 2026, exports to the US followed a three-phase pattern:

1. A brief rise in May
2. A steady decline from June to September amid tariff pressure
3. A short recovery in October and November before slipping again in December and January

With reciprocal US tariffs expected to be reduced from 50% to 18%, GTRI anticipates a potential recovery in shipments.

Meanwhile, exports to the rest of the world remained relatively stable, rising marginally from $29.9 billion to $30.0 billion (+0.3%).

Broader Outlook

The latest data suggest that while US tariffs have significantly affected India’s export performance, exporters are gradually expanding into alternative markets.

The current phase reflects a transitional period: tariff-induced slowdown in the US market alongside early signs of diversification across Asia, Europe, and the Middle East.

If tariff reductions materialise as expected, India’s export growth momentum could strengthen in the coming months.