Trump tariffs hit India’s shipments to US in August, growth slumps to 9-month low

By: Team India Tracker

Textile exports to the US total about $11 billion annually, making the decline significant. Gems and jewellery fell 3%, seafood 9%, while electronics rose 26% in August, slower than July’s 34% growth.

India’s exports to the US are starting to slow down, and the reason is simple: higher tariffs in Washington. After months of strong growth, shipments are now feeling the squeeze.

Government data show exports to the US rose just 7.15 per cent in August from a year earlier, reaching $6.9 billion. That’s much weaker than July, when exports jumped nearly 20 per cent to about $8 billion. It’s the slowest pace in nine months and the first clear sign that tariffs are taking a toll.

Until now, exporters had been moving quickly to ship goods before the new tariffs came into effect. Between April and July, exports to the US grew at an average of 22 per cent, far higher than the normal 17–18 per cent trend. But with the Trump administration imposing a 25 per cent duty on most Indian goods on August 7—and doubling it again on August 27—that strategy has run out of road.

The impact is spreading across industries. Engineering goods, the top export to the US worth about $20 billion a year, shrank compared to July. Textiles fell more than 5 per cent month-on-month, while ready-made garments dropped almost 8 per cent.

New Delhi sends about $11 billion of textiles to America each year, so the fall is significant. Gems and jewellery shipments slipped over 3 per cent, and seafood exports dropped nearly 9 per cent. Chemicals and electronics still grew year-on-year, but slower than in July. Electronics, helped by strong demand for smartphones and laptops that are not yet under tariffs, grew nearly 26 per cent in August, but that was weaker than the 34 per cent growth a month earlier.

Looking at the bigger picture, India’s total exports across all countries rose 6.7 per cent in August to $35.1 billion, compared with 7.3 per cent in July. Imports fell 10 per cent to $61.6 billion, helped by lower global commodity prices. That narrowed the trade deficit to $26.5 billion, down from $27.4 billion in July and much smaller than the $35.6 billion gap a year earlier. Even so, the deficit remains higher than the April–July average of $23.7 billion, showing pressure hasn’t gone away.

The concern now is what happens next. The August numbers capture only part of the tariff impact, since the second round of duties took effect late in the month. September’s trade data could show a much sharper drop. Economists warn this could push the trade deficit higher again, especially if imports pick up at the same time.

This is a setback for India’s bigger economic strategy. The government has been trying to attract global companies to set up factories in India, pitching the country as a manufacturing alternative to China. But for investors, access to the US market is a major part of that calculation. If tariffs close that door, India’s pitch loses some shine.

At the same time, India is trying to diversify beyond America. Exports to other countries grew 6.6 per cent in August, faster than the 4.3 per cent growth in July. That’s encouraging, but the US is still India’s single largest buyer. In the first five months of this fiscal year, shipments to America totalled more than $40 billion, up 18 per cent from last year. Replacing that scale of demand elsewhere won’t be easy.

Politics also complicate matters. President Donald Trump has made tariffs a core part of his economic agenda, not just against China but also partners like India. That makes a quick reversal unlikely. For Indian exporters, this means the higher cost of entry into the US market could be here to stay for some time.

The ripple effects could extend to jobs and incomes. Sectors such as textiles, engineering, and autos employ millions of workers, many in small and medium-sized firms. If orders keep falling, these companies may cut back on hiring or wages, which could hurt household spending in India.

There are some bright spots. Electronics exports remain strong, and India’s efforts to become a hub for smartphone and gadget production are showing results. As long as tariffs don’t hit those categories, this industry could keep growing.

But the bigger picture is more worrying. The slowdown in August looks like a warning shot. With September data set to reflect the full force of higher tariffs, India could be heading into a tougher export environment. The next few months will reveal whether the export engine can adapt and keep running—or whether it risks stalling under US pressure.