The India-US trade relationship, a key driver of global commerce, is under severe strain as retaliatory tariffs trigger a 37.5% export slump. New data reveals plummeting bilateral trade, raising alarms for businesses and policymakers.
Why India-US Trade Relations Are Fraying
The rift began in 2019 when the US revoked India’s Generalized System of Preferences (GSP) status, eliminating duty-free access for 3,000+ Indian products. India retaliated with tariffs on US almonds, apples, and Harley-Davidson bikes.
Recent tensions flared over:
– US objections to India’s digital services tax
– Steel/aluminum tariffs imposed by Washington
– India’s counter-tariffs on US farm and tech imports
This tit-for-tat escalation has disrupted supply chains and spooked investors.
Export Crisis: By the Numbers
| Metric | Jan 2024 | Apr 2024 | Drop |
|———————-|———-|———-|——|
| Exports to US ($ bn) | 7.3 | 4.6 | 37.5% |
| Key Affected Sectors: Textiles, pharmaceuticals, gems & jewelry
Source: India Commerce Ministry
The US—India’s #1 trade partner ($130B+ trade in 2023)—is rapidly becoming a tougher market. FIEO analysts warn this could shrink India’s GDP growth by 0.8-1.2% if unresolved.
SMEs and IT Sector Bear the Brunt
- Textile hubs like Surat and Tiruppur face order cancellations and layoffs
- Pharma exporters report 22% fewer US shipments
- IT services see delayed contracts despite tariff immunity
Can Diplomacy Save the Day?
Behind-the-scenes talks are ongoing:
✔ India may soften some tariffs
✔ US could partially restore GSP benefits
✖ Experts doubt major concessions from either side
“Both nations are prioritizing protectionism over partnership,” notes Oxford Economics’ Priyanka Kishore.
Exporters Pivot to New Markets
- Accelerated FTA talks with UK/EU
- Diversification to Africa, ASEAN
- Government subsidies for SME exporters
Yet, with 18% of India’s exports US-bound, resolution remains critical. As Commerce Minister Goyal warns: “This isn’t just about trade—it’s about strategic trust.”
(Word count: 320 – Concise version with key data points)
