India’s exports to US slowed in August as Trump’s tariffs weigh

A sequential decline in major exports in August, which are also among the top outbound shipments to the US, indicates the impact of steeper tariffs.

India’s exports to the United States have grown at the slowest pace in nine months during August as Trump’s tariffs began to weigh on shipments.

Data released by the Commerce Ministry showed that the growth in export of Indian goods to the US more than halved to 7.15 percent on year in August to $6.9 billion as compared to a rise of 19.94 percent in July, amounting to about $8 billion. This slowdown marked the first major sign of the impact of steeper US tariffs. Before this, between April-July, the Indian exporters had front-loaded shipments, boosting the average US export growth to around 22 percent, well above the trend rate of 17-18 percent.

US remains the top buyer of Indian goods, with exports totalling to $40.39 billion during the April-August period of the fiscal, increasing 18.06 percent on year. The weakness in US exports comes amid a 25 percent tariff on most Indian goods imposed on August 7, which has been doubled from August 27.

A sequential decline in major exports in August, which are also among the top outbound shipments to the US, indicates the impact of steeper tariffs. However, country-wise export data for August is yet to be released.

Shipments of engineering goods declined by 5.1 percent in August compared to the previous month, showing that India’s top export to the US - valued at $20 billion annually - has begun to feel the effects of steeper tariffs.

Overall exports of textiles decreased by 5.44 percent month-on-month in August to $2.9 billion. Out of this, ready-made garments - with largest share in outbound textile shipments - registered a sequential fall of 7.77 percent. India exports nearly $11 billion across various products of textiles to the US annually. Infact, the cumulative export of textiles and apparel during August 2025 registered a de-growth of 2.73 percent even on a year-on-year basis.

Gems and Jewellery exports - another key US export - also fell sequentially by 3.25 percent to $2.3 billion in August, while outbound shipments of marine products declined by 8.65 percent to $595.7 million compared to July.

Even growth in exports of organic and inorganic chemicals increased 3.8 percent on-year in August, down from 7.2 percent in July, which translates to a sequential decline of 2.02 percent. The sector shipped $4.2 billion worth of products to the US in 2024-25, making it India’s sixth largest export item to America.

The exports of electronics grew 25.9 percent in August on year, slower than the 33.9 percent growth in July. Key items in this sector such as smartphones, laptops, computer processors, memory chips, and hard drives are exempted from US tariffs so far.

While shipments to America slowed, non-US exports accelerated, rising by 6.6 percent on year in August, compared with 4.3 percent on year last month.

This contributed to a 6.7 percent year-on-year growth in overall merchandise exports to $35.10 billion in August 2025, although this was slower than the 7.3 percent year-on-year increase recorded in July. Meanwhile, goods imports fell 10.1 percent year-on-year to $61.59 billion.

India's merchandise trade deficit narrowed to $26.5 billion in August from $27.4 billion in July, and is significantly lower than the year ago level of $35.6 billion, but economist warn that the gap is still elevated, as exports too fell sequentially. The trade deficit in August is higher than the average of $23.7 billion seen during April-July 2025.

Barclays had in a note on September 15 said, “...exports of engineering goods, pharma, chemicals also slowed in August versus July. Exports of textiles and ready-made garments and carpets, for which the US is the key destination, contracted in August on-year... exports to the US are already exhibiting signs of deceleration.”

Economists point out that since the additional levy imposed by the US from August 27, the impact of tariffs will be more pronounced in the trade figures for September. “The penalty is likely to drive down exports to the US materially in September 2025, which should lead to a sharp dip in overall exports, while also pushing up the trade deficit in the month,” said Aditi Nayar, Chief Economist, ICRA.