Nearly a third of India’s exports to the US may receive additional relief as a result of the US Supreme Court’s ruling to overturn tariffs put in place during the Trump administration. These exports were severely impacted when Washington levied a 50% tax in August.
Indian exporters may be able to regain pricing competitiveness in a number of labor-intensive industries if tariffs return to Most Favoured Nation (MFN) rates, which were approximately 3% before to the tariff escalation. After the two nations signed a joint declaration, the US decided to remove charges relating to Russia, which were initially expected to drop to 18 percent. As a result, the tariffs were lowered to 25 percent.
Over $6 billion, or nearly one-third, of India’s roughly $19 billion in exports to the US between September and November experienced year-over-year declines of more than 30% as a result of the tariff increase. Over the course of these three months, the total damage came to around $4 billion, with shipments in several labor-intensive and commodity-based sectors practically collapsing.
Exports dropped to almost nothing in several sectors. Shipments of basmati rice fell to nil, down from almost $83 million during the same period last year. Pomfret exports fell precipitously, and shipments of maize and corn flour also fell precipitously.
In the gem and jewelry industry, the effect was most noticeable. Exports of non-industrial diamonds fell 96 percent, from $156 million to barely $14.4 million. Despite making up about $1 billion in commerce during the same period last year, cut and polished diamonds, one of India’s biggest export categories to the US, saw a 74% decrease.
The categories of consumer goods and food also declined. Exports of dried pasta plummeted by almost 70%, shipments of gold jewelry fell by about 50%, and exports of battery charges, tea bags, and black pepper fell by around 50%. Seasonal clothing, such blazers and woolen jackets, had a 35% year-over-year decrease, demonstrating how vulnerable they are to price rises brought on by tariffs.
It did not negatively impact every sector. As a result of continued supply-chain diversity and relative protection from tariff shocks, electronics exports demonstrated resilience, with smartphone shipments jumping 217 percent and personal computer exports more than quadrupling throughout the period.
When compared to the same period last year, India’s total exports to the US decreased by only around 1% between September and November, indicating that gains in some high-value industries more than outweighed losses in other areas.
However, Section 338 of the Tariff Act of 1930 and Section 122 of the Trade Act of 1974 offer the possibility of tariffs returning if the United States employs other trade measures.
