Trump Tariffs Couldn’t Break India’s US Export Habit: Here’s Why

India's export share to the US remains resilient at about 20% for the 12 months through July, according to trade ministry data. This marks an increase from 17.4% in 2022-23, Moneycontrol reported. India has also broadly maintained its share of exports to other major markets during this period.

The sustained volume weathered a year of fluctuating trade levies. President Donald Trump's tariffs on Indian goods peaked at 50%, dropped to 18% in February 2026, and currently stand at 10%.

In response, Prime Minister Narendra Modi's government expedited free trade negotiations. India inked a deal with the UK that took effect in July 2026. The country is also pursuing pacts with the European Union, Oman and New Zealand.

Ajay Sahai, director general of the Federation of Indian Export Organisations, said the US remains an attractive market. "It will take at least two to three years for market diversification to show meaningful results," Sahai said.

The Indispensable American Market

The US market remains uniquely important due to its sheer scale and appetite for a broad range of Indian goods. It is a vital destination for electronics, engineering goods, pharmaceuticals, gems and jewellery and textiles.

Despite months of high-level talks, the two countries have yet to sign a trade deal. This lack of a formal agreement has prompted Indian officials to work on expanding the number of markets where exporters can compete on favourable terms.

Exporters are actively scouting newer markets to reduce risk. Sahai said "the industry has become extremely cautious of the fact that they have to diversify as a strategy to de-risk".

"And from that perspective, I think it’s a very good lesson the US tariff war taught us," Sahai said.

Expanding Global Trade Alliances

New Delhi is extending its diplomatic outreach to secure new trade agreements. India signed terms of reference with the Southern African Customs Union in August 2026 to accelerate trade negotiations. The government is seeking to extend this network across Latin America, the Middle East and Africa.

To broaden the export range, the government added about 500 new product lines, mainly in electronics, engineering and marine products.

Commerce Secretary Rajesh Agrawal outlined the diversification strategy to reduce reliance on any single market. "The focus is on engaging with economies that collectively account for over two-thirds of global GDP," Agrawal told Bloomberg News, Moneycontrol reported.

"In an environment of global uncertainty and shifting trade patterns, FTAs also serve as institutional anchors for trusted economic partnerships," Agrawal said.

Payoffs and Alternative Markets

Earlier strategic agreements are yielding results. The 2022 trade agreements with Australia and the UAE are paying off, with Australia now among India's faster-growing markets. The UAE was India's second-biggest export destination in the 12 months through July.

Trade with neighbouring regions also recorded sharp increases. Exports to China surged 42% to $21.5bn in the 12 months through July, according to Bloomberg calculations based on official figures via Moneycontrol. This compares with $88.5bn shipped to the US.

Several smaller destinations are growing rapidly, though from bases that remain a fraction of the US market. These include Tanzania, Vietnam, South Korea, Sri Lanka and Kenya.

Trade analyst Pritam Banerjee, former head of the think tank Centre for WTO Studies, said India's window of opportunity to shift manufacturing away from China is narrow. He urged deeper integration with G20 nations—which represent 85% of global GDP—along with countries in Latin America, the Middle East and Africa to aid this transition.