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BUSINESS & TRADE APRIL 24, 2026 | The Indian Eye 34

TARIFF TREMORS

How America’s Trade War Is

Recasting India’s Export Landscape

Rising tariffs and shifting demand are forcing India to rethink its trade

strategy as its surplus with the US narrows.

OUR BUREAU Rajesh Agrawal pointed to the com-
pounded challenges in March 2026,
New Delhi / Dubai
stating, “One of the key reasons we
ndia’s trade equation with the don’t need to find reasons also here
United States is undergoing a has been the challenges on trade
Isubtle but significant shift, as tar- front, due to Middle East crisis… our
iff measures imposed under President exports to Middle East in the month
Donald Trump begin to ripple through of March has dipped by USD 3.5 bn…
export sectors and reshape long-stand- In percentage term it has been a de-
ing patterns. The numbers tell a story cline of 57.95 per cent.” Imports from
of resilience under pressure—but the region also fell sharply by 51.6 per
also of emerging vulnerabilities. cent, or USD 8.7 billion.
In FY 2025–26, India’s exports
to the US inched up only marginally These overlapping crises—tar-
to USD 87.31 billion from USD 86.51
billion a year earlier. At first glance, iffs, geopolitical tensions, and
the increase suggests stability. But demand fluctuations—are cre-
beneath that modest rise lies a slow-
down in export momentum, widely ating a volatile environment
attributed to tariff barriers and grow- for Indian trade. While the
ing uncertainty in the American mar-
ket. At the same time, imports from headline figures suggest that
the US surged sharply to USD 52.90 Within the gem and jewellery sector, for instance, traditional segments like cut and polished exports are holding steady,
billion from USD 45.63 billion, nar-
rowing India’s trade surplus to USD diamonds—still accounting for 43.9 per cent of exports (ANI file photo) the underlying pressures are
34.41 billion from USD 40.88 billion forcing structural adjustments
the previous year. The tariff war’s impact is perhaps and adapted swiftly to evolving global
This shrinking surplus reflects a most visible in sector-specific data, trade dynamics.” across industries.
broader imbalance triggered by tariff particularly in the gem and jewellery This diversification is already vis-
distortions. While Indian goods con- industry—one of India’s flagship ex- ible. Exports to the UAE grew over Within the gem and jewellery
tinue to find their way into American port segments. Exports in this sector 22 per cent during most of the year, sector, for instance, traditional
markets, the pace has slowed, and US declined by 3.32 per cent to USD while Australia recorded a striking segments like cut and polished dia-
products are entering India more ag- 27.72 billion in FY26, a drop largely 38.33 per cent increase, aided by fa- monds—still accounting for 43.9 per
gressively. The result is a tightening of attributed to “evolving tariff regimes vourable trade agreements. These cent of exports—declined by 8.52
margins in one of India’s most crucial in the US, along with global invento- shifts indicate that Indian exporters per cent. In contrast, silver jewellery
bilateral trade relationships. ry corrections, subdued discretionary are not merely reacting to tariffs but exports surged by over 52 per cent,
The United States remains India’s demand, and increasing competition are actively seeking to de-risk their driven by affordability and chang-
top export destination, but the chang- from alternative luxury segments.” global exposure. ing consumer preferences. Similarly,
ing dynamics have forced exporters The United States has tradition- However, diversification is not an studded gold jewellery saw growth,
to look elsewhere. Countries like the ally been a major market for Indian immediate remedy. Established mar- reflecting a shift toward value-added
UAE and China have gained promi- gems and jewellery, and tariff-re- kets like the US offer scale and sta- products that can better withstand
nence, with exports to China surging lated uncertainties have dampened bility that newer destinations cannot price and tariff pressures.
to USD 19.48 billion from USD 14.25 demand. Exporters, facing unpre- instantly replicate. Moreover, Euro- These trends point to a broad-
billion—a robust 36.7 per cent growth. dictability in pricing and access, have pean markets such as the Netherlands er transformation: Indian exporters
Yet, this pivot is not without complica- had to recalibrate strategies. As Kirit and the UK have shown signs of mod- are moving up the value chain and
tions. Imports from China have also Bhansali, Chairman of the Gem and eration, adding another layer of com- diversifying both products and mar-
ballooned to USD 131.63 billion, un- Jewellery Export Promotion Coun- plexity to India’s export outlook. kets. Yet, the transition comes with
derscoring a persistent structural de- cil, noted, “Exporters have active- The tariff war is also intersecting costs—investment, uncertainty, and
pendence that offsets gains made on ly diversified into new geographies, with other global disruptions, ampli- the challenge of building new trade
the export front. strengthened value-added segments, fying its effects. Commerce Secretary relationships.

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