Why America still cannot shake India’s export machine

Despite Donald Trump's tariff offensive, Indian exports to the United States have remained surprisingly robust. The US had imposed tariffs of up to 50% on various Indian products such as garments, gems and jewellery, machinery, and home décor. However, these tariffs did not lead to a collapse in exports to America. In fact, India continues to send over one-fifth of its merchandise exports to the US, even as its overall export volume has increased.

There are several factors contributing to India's resilience in the US market. Firstly, the competitiveness of Indian products remains a key advantage. Many Indian goods, such as smartphones and generic pharmaceuticals, are cheaper, better, or more reliable than alternatives from other countries. Secondly, Indian companies have established strong relationships with American importers, wholesalers, retailers, and ultimately consumers.

Changing these established supply chains overnight would be challenging for all parties involved. Finally, India has been actively diversifying its export markets through new trade agreements with the UK, the EU, Oman, and New Zealand. While these agreements have provided increased opportunities, they have not yet fully replaced the United States as India's most important export market.

In 2024, India's merchandise exports to the US were valued at approximately $86.35 billion. Even as overall Indian exports grew to a record $863.1 billion in FY2025-26, comprising $441.8 billion in merchandise and $421.3 billion in services, the US market remained overwhelmingly dominant. During the first quarter of 2026, India's exports to the US fell by 16% to $26.2 billion compared to the same period in the previous year.

However, this decline was primarily due to a slowdown in labour-intensive sectors such as diamonds, jewellery, and shrimp, rather than a structural decline. Despite these challenges, the US market remains vital for India due to its size, affluence, and deep integration into Indian supply chains. Consequently, Indian exporters are unlikely to abandon the US market immediately, despite the shifting tariff environment.