India's exports to the United States declined 1.83% year-on-year to $6.88 billion in December 2025, pressured by 50% tariffs effective since August 2025 under President Donald Trump. Overall merchandise exports rose modestly 1.9% to $38.51 billion, buoyed by diversification to China (up 67% to $2 billion) and growth in electronics, pharma, and engineering goods. Commerce Secretary Rajesh Agrawal highlighted resilience, projecting FY26 goods and services exports above $850 billion despite the trade deficit widening to $25.04 billion.

Impacted Sectors

Labor-intensive industries suffer most from the steep duties, with leather, gems & jewelry, textiles, apparel, footwear, chemicals, and shrimp facing up to 63.9% effective rates . Barclays estimates 70% of US-bound exports at risk, prompting 30-50% turnover drops and shifts to Vietnam/Bangladesh . Exempt sectors like pharmaceuticals, smartphones (up 43.7% to $18.8 billion Apr-Nov), and some engineering goods drive 9.8% April-Dec growth to $65.9 billion.

Trade Negotiations Progress

The first tranche of a bilateral trade agreement (BTA) is "very near," per Agrawal on January 16, following virtual talks and a January 13 call between Minister Piyush Goyal and US Trade Rep Jamieson Greer . It targets relief for $48.2 billion in exports, amid US claims of delayed Indian outreach—denied by New Delhi. No firm deadline exists, but teams address sticking points like energy imports .

Rupee Pressure and Policy Response

Tariff uncertainty drove the rupee to a record 90.0675 low last month, eased by RBI interventions . Government allocates $5 billion exporter aid, plus incentives via Export Promotion Mission . Budget 2026 eyes "Trump shock absorber" funds for MSMEs.

Diversification Success

China overtook US as top partner at $110.2 billion (Apr-Dec), with UAE, Netherlands, and Singapore rising. EU FTA nears signing by late January Republic Day summit; UK/Oman deals advance . Marine exports grew 15.53% to $6.56 billion via new markets, exemplifying adaptation.