India's Exports to the US Decline by 14% in August 2025: Implications and Market Impact

India's exports to the United States experienced a 14% month-on-month decline in August 2025, totaling USD 6.86 billion. This downturn follows the implementation of a 50% tariff on Indian goods by the U.S. administration, effective in two phases: a 25% tariff on August 7 and an additional 25% penalty on August 27 due to India's purchase of discounted Russian crude oil.

Key Highlights

August Exports: USD 6.86 billion (down from USD 8 billion in July)

Year-on-Year Growth: 7.15% increase compared to August 2024

Top Export Destination: The U.S. remains India's largest export market

Tariff Impact: 50% total tariff on Indian goods entering the U.S.

Sectoral Impact

Textiles: Home textile manufacturers could face a 5–10% revenue decline this fiscal year due to the new tariffs.

Diamonds: Exports of cut and polished diamonds are projected to decline by 7–10% in FY26, attributed to reduced demand and tariff pressures.

Gems & Jewelry: The sector is experiencing paused orders and reduced pricing, leading to job insecurity.

Potential Market Implications

GDP Growth: Economists estimate that the tariffs could reduce India's GDP growth by 30 to 80 basis points this fiscal year.

Export Competitiveness: Approximately 55% of India's exports to the U.S., valued at USD 47–48 billion, are now subject to a 30–35% pricing disadvantage compared to competitors like China and Vietnam.

Government Response: The Federation of Indian Export Organisations (FIEO) has urged the Indian government to implement strategic actions and provide support to mitigate the sectoral fallout.

By Nehal Taparia

This content is for educational and knowledge purposes only and should not be considered as investment or Trading advice. Please consult a certified financial advisor before making any investment or Trading decisions.

Latest Course

Latest posts

16 Sep, 2025
India’s Trade Performance in August 2025: Exports Up, Imports Down, Deficit Narrows
15 Sep, 2025
India's Unemployment Rate Declines to 5.1% in August 2025
15 Sep, 2025
World Bank’s IFC to Double India Investments to $10 Billion by 2030
15 Sep, 2025
Indian REITs Deliver 6–7.5% Yields, Outpacing US & Japan Markets: What It Means for Investors
13 Sep, 2025
India’s Ambitious Vision – Two Public Sector Banks Among World’s Top 20 by 2047

Our Recent FAQS

Frequently Asked Question &
Answers Here

Q1: What caused the 14% decline in India's exports to the U.S. in August 2025?

The decline is primarily due to the implementation of a 50% tariff on Indian goods by the U.S., effective in two phases: a 25% tariff on August 7 and an additional 25% penalty on August 27

Q2: Which sectors are most affected by the new U.S. tariffs?

Sectors such as textiles, gems and jewelry, and cut and polished diamonds are experiencing significant challenges due to the increased tariffs.

Q3: How might these tariff increases impact India's economy?

The tariffs could reduce India's GDP growth by 30 to 80 basis points this fiscal year and affect the competitiveness of Indian exports in the U.S. market.

Q4: What measures is the Indian government considering in response?

The government is fast-tracking domestic reforms to mitigate the impact of the tariffs and support affected exporters.