Trade deficit narrows: India’s exports rose in August even as Trump’s 50% tariffs took effect; newer markets eyed

With businesses front-loading shipments, India’s exports experienced a second consecutive monthly increase during August, following the implementation of US President Donald Trump's tariffs.

This exports and imports data report marks the first since the United States imposed a 25% tariff on Indian products on August 7, which was subsequently doubled after 20 days as a response to New Delhi's Russian oil purchases.

These tariffs rank amongst the world's highest and risk undermining the competitiveness of Indian exports, particularly labour-intensive goods, against regional competitors such as Vietnam and Bangladesh.

According to data released by the Ministry of Commerce and Industry on Monday, the trade deficit decreased to $26.49 billion in August from July's eight-month peak of $27.35 billion. The figure exceeded Bloomberg survey predictions, which anticipated a $24.8 billion deficit for August.


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August witnessed a 10.1% decline in imports to $61.59 billion compared to the previous year, whilst exports increased by 6.7% to $35.1 billion.

Companies expedited their orders prior to the US tariff implementation, with exports to the United States - India's primary export destination - reaching $40.39 billion from April to August, an increase from $34.21 billion in the corresponding period last year, according to data quoted by Bloomberg.

The relationship between India and the US is showing positive developments recently when Trump and Prime Minister Narendra Modi agreed to restart trade discussions. According to India's chief negotiator Rajesh Agarwal at a press briefing, a US trade delegation will arrive in New Delhi Monday night. "We will be holding talks tomorrow to see what will be the future of talks," he said.

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India is actively seeking to assist exporters in exploring new markets whilst pursuing trade agreements with the European Union more intensively. The next round of negotiations is scheduled for October 6-10.

At a Monday press briefing, Commerce Secretary Sunil Barthwal said that India aims to reduce its geographic dependencies to minimise supply chain disruption effects. He noted that the government has identified approximately 100 products where domestic manufacturing can be enhanced to decrease import reliance.

Statistical reports indicated gold imports increased to $5.4 billion in the previous month from $3.9 billion in July, whilst crude oil imports decreased to $13.2 billion in August from $15.5 billion in July.