Trump’s Tariff Storm Fuels Inflation in the US, Slashes India’s Exports—but New Delhi’s Diversification Push Gains Momentum

Contents

US Consumers Feel the Heat of Trump’s Tariff Offensive India’s Exports to the US Take a 37.5% Hit India’s Diversification Strategy Begins to Show Results Sectors Finding New Buyers in Asia, Europe, and the Gulf “Diversification Is Visible,” Say Officials Dependence on the US Remains a Concern Global Trade Realignment Underway

The economic ripple effects of President Donald Trump’s aggressive tariff policy are being felt on both sides of the globe. While American households grapple with rising grocery and utility bills, India’s exports to the United States have plunged 37.5 percent in just five months, prompting New Delhi to accelerate its market diversification strategy across Asia, Europe, and the Gulf.

US Consumers Feel the Heat of Trump’s Tariff Offensive

According to a recent ABC News/Washington Post/Ipsos survey, seven out of ten Americans now report spending more on groceries compared to last year. The surge in household costs isn’t limited to food: six in ten respondents said their utility bills have climbed, while nearly four in ten are paying more for housing, healthcare, and fuel.

The impact is widespread and bipartisan. A staggering 89 percent of Democrats, 73 percent of independents, and even 52 percent of Republicans acknowledged that food prices have surged under Trump’s tariff regime. Women, according to the survey, are disproportionately feeling the cost-of-living spike.

With 65 percent of Americans now disapproving of the tariff policy, the issue has become politically charged. Many argue the tariffs—intended to protect American industries—are instead driving inflation and eroding consumer purchasing power. The U.S. Supreme Court is currently reviewing challenges to Trump’s trade measures amid growing backlash from businesses and voters alike.

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India’s Exports to the US Take a 37.5% Hit

India, one of America’s key trading partners, has been among the hardest hit by Trump’s escalating tariff war. In August 2025, the U.S. imposed an additional 25 percent duty, bringing total tariffs on Indian goods to 50 percent, in retaliation for New Delhi’s continued oil imports from Russia.

The result: India’s exports to the US dropped from $8.8 billion to $5.5 billion between May and September, according to data from the Global Trade Research Initiative (GTRI).

The steepest declines were seen across key sectors:

Pharmaceuticals: Down 15.7%
Industrial metals and auto parts: Down 16.7%
Aluminium: Down 37%
Copper: Down 25%
Iron and steel: Down 8%
Labour-intensive sectors—including textiles, gems, jewellery, chemicals, agri-products, and machinery—fell 33%, from $4.8 billion to $3.2 billion.

“Tariff-free products, which made up nearly one-third of India’s shipments, also saw a 47 percent decline,” noted GTRI’s report, describing the drop as one of the sharpest in recent years.

India’s Diversification Strategy Begins to Show Results

In response to the tariff shock, New Delhi swiftly rolled out a market diversification strategy aimed at reducing reliance on the U.S. and expanding exports to alternative destinations.

According to The Times of India and The Economic Times, this strategy is already yielding measurable gains. Following the U.S. tariff hikes in August, Indian exporters have pivoted toward new markets across Asia, Europe, and the Middle East, with early data for September showing visible resilience across several sectors.

Sectors Finding New Buyers in Asia, Europe, and the Gulf

India’s diversification drive is beginning to bear fruit across multiple industries:

Cotton Garments: While exports to the U.S. dropped 25%, shipments to the UAE, France, and Japan surged.
Marine Products: Exports to the U.S. fell 26.9%, but rose over 60% to China, Vietnam, and Thailand.
Tea and Beverages: Exports to the U.S. declined 22%, but increased to UAE, Iraq, and Germany.
Basmati Rice: Shipments to Iran jumped six-fold to $41 million.
Carpets: Exports to the U.S. contracted 26.1%, but grew in Canada and Sweden.

“Diversification Is Visible,” Say Officials

Commerce ministry officials say India’s export shift marks a strategic reset rather than a temporary response to tariffs.

“Export diversification is visible and supported by India’s free trade agreements, production-linked incentive (PLI) schemes, and deeper integration with global supply chains,” an official told The Economic Times.

Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), echoed this optimism. “Export diversification has started to happen, and this is healthy for India’s long-term trade growth,” he said.

The government has identified 40 priority import destinations across North America, Europe, Asia, Africa, and Latin America—representing three-fourths of global demand for textiles and apparel. Through targeted trade fairs and sector-specific outreach, India aims to boost its global market share from 5–6 percent to double digits over the next few years.

Dependence on the US Remains a Concern

Despite the early success of diversification, several sectors remain heavily dependent on the U.S. market. Nearly 60 percent of India’s carpet exports, 50 percent of made-ups, 30 percent of gems and jewellery, and 40 percent of apparel exports still rely on American buyers.

Talks over a Bilateral Trade Agreement (BTA) between New Delhi and Washington remain stalled, even as both countries aim to achieve $500 billion in bilateral trade by 2030.

Still, India’s overall export data for September offers a glimmer of hope. Total merchandise exports rose 6.7 percent year-on-year to $36.38 billion, even as shipments to the U.S. fell 11.9 percent to $5.46 billion, suggesting that new market linkages are beginning to offset some of the losses.

Global Trade Realignment Underway

Analysts say Trump’s tariff policy has accelerated a global realignment in trade patterns, pushing emerging economies like India to diversify and strengthen regional trade networks.

“India’s rapid pivot to non-U.S. markets underscores its maturing export ecosystem,” said a senior trade economist. “While the short-term pain is undeniable, the long-term gain could be a more balanced and resilient trade portfolio.”

For now, however, American consumers are bearing the brunt of Trump’s protectionist measures—facing higher prices at supermarkets and gas stations—while India recalibrates its export strategy to stay competitive in an increasingly fragmented global economy.