India’s exports to US may shrink 6.4% in 2025 due to tariff: GTRI

The contraction will be led by a drop in exports of fish and crustaceans, which may fall by a fifth. Exports of iron and steel products may decline by 18 per cent; diamonds, gold, and related products by 15.3 per cent; vehicles and parts by 12.1 per cent; and electrical, telecommunications, and electronic products by 12 per cent, according to GTRI’s report. In 2024, India exported $89.81 billion worth of goods to the US.On April 2, US President Donald Trump signed an executive order introducing new reciprocal tariffs, imposing additional ad valorem duties ranging from 10-50 per cent on imports from a host of countries. The baseline 10 per cent duty took effect on Saturday, with additional country-specific duties coming into force from April 9. 

Commerce and Industry Minister Piyush Goyal is also expected to meet industry representatives and exporters to take stock of the issues faced by Indian exporters due to the reciprocal tariffs imposed by Washington.  Other categories expected to contract include plastics (9.4 per cent), carpets (6.3 per cent), petroleum products (5.2 per cent), organic chemicals (2.2 per cent), and machinery (2 per cent).

However, India’s competitive position in select product segments may help cushion some of the losses. Sectors that could see modest gains include made-up textile, apparel, ceramic products, inorganic chemical, and pharmaceutical. 

Certain product categories such as petroleum, solar panels, and pharmaceuticals have been exempted from reciprocal tariffs. These items account for $20.4 billion, or 22.7 per cent of India’s exports to the US. Similarly, Washington has already imposed an additional 25 per cent duty on steel, aluminium, automobiles, and automobile parts. These represent $2.2 billion, or 2.5 per cent of India’s total exports to America. 

“However, the largest impact falls on the remaining basket of goods. These exports, valued at $67.2 billion or 74.8 per cent of total trade, will now be hit with a 26 per cent tariff. While Most Favoured Nation tariffs still apply, this sweeping hike is expected to reshape trade dynamics across a wide range of industries,” the report said.

Exports of electronics and smartphones to the US stood at $14.4 billion in 2024, accounting for 35.8 per cent of India’s global shipments in this category. 

While the average import duty on these products is just 0.4 per cent, Indian goods are now set to face a steep tariff, raising concerns about their competitiveness in the American market, it said. India is currently the fourth-largest supplier of electronics and smartphones to the US, behind China, Mexico, and Vietnam. “We estimate that the impact of the tariff hike (on electronics and smartphones) could reduce India’s exports to the US by 12 per cent, or roughly $1.78 billion,” it said.

Seafood exports may also be hit hard. “These products, which previously entered duty-free, now face a 26 per cent tariff. India, the third-largest seafood supplier to the US after Canada and Chile, is projected to lose ground. Exports are expected to fall by 20.2 per cent, or $404.3 million, especially as Canadian products remain tariff-free under the US-Mexico-Canada Agreement,” it said.