US duty hike hits India’s labour intensive industries, aluminium shipments slide

With the US imposing tariff rules at the beginning of 2025, India’s exporters face a hit in shipment volumes. Statistics by the Global Trade Research Initiative (GTRI) reveal India’s sales to the United States dropped by 28.5 per cent between May and October, following the implementation of Washington’s revised duties.

Exporters experienced early stress with shipments reduced from USD 8.83 billion to USD 6.31 billion, just as tariff adjustments were being introduced. But the situation escalated quickly with US tariffs rising from 10 per cent in April to 50 per cent in late August.

GTRI warns that these downturns may translate into employment pressure if demand does not recover soon.

The impact has not been limited to consumer goods. Exports of:

• Industrial metals, including aluminium, iron & steel, copper, and auto parts, decreased 23.8 per cent from USD 620 million to USD 480 million, accounting for 7.6 per cent of total shipments
• Pharmaceuticals, petroleum products and smartphone exports fell from USD 3.42 billion to USD 2.54 billion, albeit maintained a share of 40.3 per cent of total exports in October
• Smartphones, one of India’s fastest-growing export categories, plunged from USD2.95 billion to USD1.50 billion in October

Analysts say that higher input costs combined with tariff-related pricing disadvantages have undermined India’s ability to hold on to US market share, especially at a time when American demand has become more selective.

Also read: India assesses potential $4.6 billion export hit from US 50% aluminium and steel tariff—how real is the threat?

GTRI’s assessment suggests that the weakness in metals and auto components is less about tariff discrimination and more a reflection of subdued industrial activity in the US, as American buyers have cut back across suppliers.

With pressure building, the think tank has urged New Delhi to move quickly on the long promised Export Promotion Mission and open a dialogue with Washington to roll back the additional 25 per cent Russia-linked tariff currently applied to Indian goods.

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The Mission itself has made little progress. Although announced in March and formally cleared on November 12, GTRI notes that the initiative remains only on paper, warning that bureaucratic delays could blunt its effectiveness. It pointed out that nearly eight months into the fiscal year, none of the planned schemes have been launched, while established programmes, including the Market Access Initiative and the Interest Equalisation Scheme, have yet to release funds this year.

The government has committed INR 25,060 crore ( USD 2.8 billion) for the Mission between 2025–26 and 2030–31, to strengthen MSMEs, nurturing new exporters and providing targeted support to industries that are labour intensive..

GTRI argues that if the US were to withdraw the extra Russia-related duty, the effective tariff faced by Indian exporters would drop to 25 per cent, offering immediate and substantial relief to firms already battling shrinking orders.

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