The U.S. Tariff Shock Did Not Hit India Evenly

A tariff is often described as if it affects an entire country. But tariffs do not affect every product, company or market in the same way.

This became clear when the United States sharply increased tariffs on Indian goods. Some Indian exports to the US fell sharply. Others changed very little. Some products continued to grow quickly. In a few industries, exporters lost sales in America but increased their total exports by finding buyers in other countries.

The same tariff can create very different problems. The impact depends on how much a product relies on the US market, whether exporters can handle higher costs, whether other countries can supply similar products, and how quickly firms can find new buyers.

The real story, therefore, is not simply how much India’s exports fell. It is why the same shock led to very different results across India’s export economy.

A tariff does not affect every export in the same way

Data from the Commerce Ministry’s Trade Intelligence and Analytics Portal compare exports from September to November 2025 with the average for the same months in 2023-24. The figures show a clear difference between products.

Exports of telecom instruments to the US rose by 237%, while exports of electrical machinery increased by 15%. Much of the increase in telecom exports came from products that were not affected by the new tariffs, especially smartphones.

Products hit by the tariff shock moved in the opposite direction. Exports of pearls and precious stones to the US fell by about 78.5%. Gold jewellery exports fell by 39%, cotton fabrics by 23%, marine products by 17%, and readymade cotton by 4.6%.

These figures show why we cannot describe India’s export performance with a single number. India’s exports to America can rise even while important export industries face a sharp fall in sales. In this case, the increase in telecom exports helped hide the weakness in products hit by tariffs.

The first question is therefore not simply whether Indian exports survived. It is which exporters faced the shock, which could adjust, and why their results were different.

Exposure matters before the tariff even arrives

The first difference between industries is how much they depend on the US market.

An exporter that mainly sells to America has fewer options when selling there becomes more expensive. An exporter with customers in several countries has more room to move its sales to other markets.

This creates two different types of risk.

One is production risk: can a company still compete after the tariff makes its product more expensive?

The other is market risk: does the company have another place where it can sell its product?

An industry may be good at making products at a competitive cost but still face serious risk if it depends heavily on one market. On the other hand, an industry facing a sharp fall in US orders may protect its overall business if it already has other buyers.

The pressure was clear in several industries that employ many workers. In October 2025, exports to the US fell in several sectors:

• Leather and leather products fell by 15.7%.
• Gems and jewellery fell by 29.5%.
• Organic and inorganic chemicals fell by 21%.
• Engineering goods fell by 16.7%.
• Cotton yarn fell by 13.3%.
• Man-made yarn fell by 11.8%.
• Jute fell by 27.8%.

The US was a major market for many of these products.

The problem is not only that tariffs make goods more expensive. They change how well an exporter can compete in a particular market. The result depends on what other options that exporter has.

Some of the tariff cost is absorbed by businesses

When a tariff raises the cost of selling a product in a market, the full increase does not always reach the final buyer.

Exporters may accept lower profits, offer lower prices to buyers, cut other costs or change where they buy their materials.

This helps explain why trade does not always fall sharply right after a tariff increase.

In October 2025, Indian exports to the US rose 15.4% compared with September. However, they were still 8.6% lower than in October of the previous year.

Government officials and exporter groups said that part of the monthly increase came from Indian exporters offering discounts to keep American customers. They were also trying to find more customers within the US.

A company can maintain its sales without maintaining its profits. If an exporter accepts lower profits to keep an existing customer, export figures may look strong even though the business is earning less from each sale.

The pressure created by a tariff is therefore not always visible as a fall in the number of goods sold. Sometimes it first appears as a fall in the price or profit earned from each sale.

Firms do not all have the same ability to absorb the shock

A company’s ability to handle a tariff depends partly on its product and on whether other countries can supply similar goods.

If buyers have few other options, an exporter may have more room to negotiate. But if several countries can supply a similar product, buyers have more choices.

The Indian exporter then faces a harder decision: accept a larger share of the tariff cost, accept a smaller order or lose the customer.

Shipment data from October show this pressure. While Indian exports to the US faced difficulties, container shipments from India to the US fell 18.4% compared with the previous year.

Shipments from Indonesia, Thailand and Vietnam, however, increased by 10.1%, 3.6% and 3.6%, respectively.

A tariff changes the position of competing exporters. If an Indian product becomes more expensive in America while a competing supplier faces a lower tariff burden, buyers may switch to that supplier.

This can happen even if India’s ability to produce the product has not changed.

The shock is therefore partly a competition between suppliers. It is not only a test of whether an Indian company can continue to produce goods at the same cost.

Diversification can reduce the loss—but only where it already exists

When firms lose sales in one market, they can look for customers elsewhere. But finding another market is not simply a matter of choosing another country.

Companies need buyers, approval to sell their products, distribution networks, business relationships and supply chains. These cannot always be built quickly.

Marine products provide one of the clearest examples.

Between September and November 2025 and the same period in 2023-24, Indian marine exports to the US fell by about 17%.

Yet India’s total marine exports increased by about 17%.

The US remained a major buyer, with a share of more than 30%. But exports to China increased by 23%. Shipments to Spain exceeded $50 million.

Exports to other European countries also increased:

• Belgium: 124%
• Netherlands: 56%
• Germany: 65%
• Italy: 23%

The adjustment did not depend on replacing America with one new market. Lost sales were spread across several countries. This reduced the sector’s dependence on any one buyer.

The same pattern appeared in the annual export figures for marine products.

In 2025-26, India’s marine product exports increased 13.9% to more than $8.4 billion, even though shipments to the US declined.

Exports to other countries also increased:

• China rose from $1.2 billion to $1.6 billion.
• Vietnam rose from $381.8 million to $648.6 million.
• Japan rose from $408.5 million to $451.1 million.
• Belgium rose from $225.3 million to $376.6 million.
• Thailand rose from $311.9 million to $362.2 million.

The American market did not become unimportant. The sector had enough demand from other countries to prevent the loss of American sales from causing a fall in total exports.

This is what diversification can do: it spreads risk instead of simply replacing the original market.

Overall export growth can hide problems in individual industries

India’s total goods exports increased 0.9% compared with the previous year, reaching $441.7 billion in 2025-26.

Agricultural exports grew faster, by 2.3% to $53.1 billion.

Yet during the same period, India’s exports to the US fell in several sectors, including pharmaceuticals, readymade garments, gold and jewellery, leather products, marine products, spices, basmati rice, and processed fruits and vegetables.

These results are not contradictory.

Some industries can increase their exports while others face serious problems. A large increase in one product or market can hide losses in another.

That is why it is important to look at what is behind the overall export growth, not only at the total number.

The key difference is between the performance of India’s export economy as a whole and the experience of individual industries.

The national figures alone do not show which companies are losing orders, which are accepting lower profits, or which have been able to sell their products in other markets.

Diversification is insurance, not replacement

Finding new markets takes time.

When exporters began looking beyond the US, the change did not happen immediately. They had to develop supply chains, find customers and build distribution networks.

During the period of high tariffs, exporters were trying to find other markets. But building new supply chains would take time, and the pressure on affected industries was expected to continue for some months.

The starting point matters.

An exporter that already has customers in Europe and Asia has more options than one that depends heavily on America.

Two companies selling similar products can therefore face very different results when the same tariff arrives.

Diversification does not make tariffs unimportant. It gives exporters more ways to respond.

Companies with fewer options may have to accept lower profits, fewer orders or lower production.

The deeper lesson is about the structure of India’s export economy

India’s export economy includes industries with different products, customers, profits and levels of dependence on particular markets.

Some can handle part of a tariff cost. Others cannot.

Some can move their exports to other markets quickly. Others need much more time.

Some compete directly with suppliers from countries such as Vietnam, Thailand and Indonesia. Others have stronger positions in their markets or can find buyers across several countries.

The US tariff episode makes these differences clear.

Several industries saw their sales to America fall. At the same time, some other industries maintained or increased their total exports by accepting higher costs or finding new buyers.

Marine exporters show this clearly. They lost sales in their largest market but increased shipments to China and Europe enough to raise their total exports.

The bigger change is not that India has become protected from trade shocks.

It is that some parts of India’s export economy are becoming better able to spread the shock across different markets.

A company with several markets does not remove risk. It changes where the risk is felt.

The US tariff shock did not hit India evenly because India does not face the global market as one exporter.

The real protection is not simply the size of India’s exports. It is the number of other ways exporters can sell their goods when one market becomes too expensive.