India’s Export Momentum After Trump’s 50% Tariffs: What the December Trade Data Reveals

India’s merchandise exports rose marginally to $38.5 billion in December 2025, a modest 1.8% increase over December 2024. Imports, however, surged to $63.55 billion, pushing the monthly trade deficit to a sharp $25 billion. Beyond the headline numbers, the December data has drawn attention for a deeper reason: it offers early clues on how India’s exports are coping after the “Donald Trump” administration imposed steep 50% tariffs on select imports beginning August 2025.

Why December’s Trade Numbers Matter

In isolation, December’s year-on-year export growth looks reassuring. But policymakers and economists are more interested in whether a new trend is emerging after the US tariffs kicked in. Since the United States remains one of India’s largest export destinations, the tariffs posed a direct test of India’s export resilience — not just to the US, but globally.

An analysis by “HSBC Global Investment Research” suggests that while exports have not collapsed, momentum has clearly weakened.

The Story Hidden in Sequential Export Data

Instead of annual comparisons, HSBC examined month-on-month export growth after adjusting for seasonal variations. This paints a more revealing picture.

Between January and July 2025 — before the tariffs — India’s exports were growing at an average sequential pace of 0.7% per month, partly driven by exporters frontloading shipments in anticipation of trade barriers. After August, this momentum dropped sharply. From August to December, average sequential growth slipped to just 0.1%.

This slowdown indicates that exporters are struggling to sustain volumes once the tariff shock became a reality.

Which Sectors Are Losing Steam

The deceleration is broad-based. While exports of electronics, engineering goods, petroleum products and textiles are still growing, their pace has slowed markedly. More concerning is that sectors such as pharmaceuticals, chemicals, and gems and jewellery have seen sequential declines.

The pattern suggests that the tariff impact is no longer confined to a few product lines but is spreading across India’s export basket.

Exports to the US Take a Direct Hit

Unsurprisingly, exports to the United States have borne the brunt of the tariffs. HSBC estimates that average sequential export growth to the US fell from 1.9% in January–July to -1.4% in August–December. In absolute terms, exports to the US dropped by roughly $7 billion a month.

This contraction has not been offset elsewhere. Exports to China rose marginally — by about $2 billion a month — while shipments to the rest of the world remained largely flat.

Why the Trade Deficit and Rupee Are Under Pressure

Muted export growth combined with rising imports widens the trade deficit, which in turn puts pressure on the rupee. Lower exports mean reduced demand for Indian currency in global markets, making the exchange rate more vulnerable at a time of global uncertainty.

The December deficit of $25 billion underscores this challenge, especially as import demand remains strong even as export momentum weakens.

The Policy Challenge Ahead

The December data suggests that fears of an immediate export collapse were unfounded, but complacency would be risky. With US tariffs likely to remain elevated, Indian policymakers face the task of diversifying export markets, deepening trade ties beyond the US, and supporting sectors that are losing momentum.

Finding new destinations, improving competitiveness, and reducing trade frictions elsewhere will be crucial if India is to prevent external shocks from derailing its export growth — and, by extension, its broader economic momentum.