India saw exports rise for a second month in August as the tariffs imposed by US President Donald Trump took effect. The trade deficit also narrowed to $26.49 billion last month — from an eight-month high of $27.35 billion in July. Exports to the United States fell to $6.86 billion in August while overall goods exports dropped to a nine-month low of $35.10 billion.
Trump had imposed a 25% reciprocal tariff against India in early August after stalled efforts to reach a trade deal. This was followed days later by an additional secondary sanction of 25% for continued purchase of Russian oil. The full extent of the Trump tariffs are likely to be felt from next month since the punitive tariffs kicked in from August 27.
What doe the data show?
India saw its trade deficit narrow to $26.49 billion in August despite the initial 25% tariff imposed by Trump. Exports rose 6.7% to $35.1 billion while imports fell 10.1% to $61.59 billion when compared against the previous year. The data also showed that gold imports rose to $5.4 billion last month — compared to $3.9 billion in July. Crude oil imports stood at $13.2 billion in August, down from $15.5 billion the previous month.
Businesses front-load shipments
Many businesses had advanced their orders before the US tariffs came into effect — with outbound shipments to the US reaching $40.39 billion between April and August. Data showed that the figure had risen sharply from $34.21 billion a year earlier. The term front-loading refers to the concentration of activities, costs, or shipments to an earlier time period. This is typically done to avoid upcoming changes and ensure that the goods reach their destination before the new rules (in this case the Trump tariffs) take effect.
Signs of India-US thaw?
President Donald Trump had heralded a thaw last week — referring to Prime Minister Narendra Modi as a close friend and reiterating the “special relationship” between the US and India. Both leaders had pledged to resume talks and voiced confidence in unlocking the “limitless potential” of a trade relationship. Representatives from both countries are slated to hold discussions in Delhi on Tuesday.