India’s exports to the US fell nearly 13% in February 2026, while its trade deficit with China has crossed the $100 billion mark, according to commerce ministry data. The decline is largely attributed to high tariffs imposed by the US, while imports from China continue to outpace exports, widening the gap.
India’s Export Decline to the US
- February 2026 Exports: India’s exports to the US dropped 12.88% year-on-year to $6.88 billion.
- Tariff Impact: Indian goods faced sweeping 50% levies in the US until recently.
- Policy Shift: After the US Supreme Court struck down Trump-era tariffs, President Donald Trump imposed a 10% duty on all countries from February 24 for 150 days.
- Volatility: Exports contracted in September, October, December, and January, but rose 22.61% in November.
India’s Trade Deficit with China
- Deficit Level: India’s trade deficit with China has crossed $100 billion during the April–February period of FY2026.
- Imports vs Exports: Imports from China continue to dominate, particularly in electronics, machinery, and chemicals.
- Strategic Concern: The widening gap raises questions about India’s dependence on Chinese supply chains.
Comparative Analysis of India’s Trade Partners
| Country | Exports from India (Feb 2026) | Tariff/Trade Issues | Trade Balance Impact |
|---|---|---|---|
| United States | $6.88 billion (-12.88% YoY) | 10% duty imposed for 150 days | Declining exports, strained relations |
| China | Rising imports, weak exports | No major tariff barriers, but imbalance | Deficit crosses $100 billion |
| EU | Stable demand | Regulatory compliance costs | Balanced trade, moderate growth |
| Middle East | Strong energy trade | Oil price volatility | Surplus in energy-related exports |
Key Drivers Behind the Trends
- Tariff Uncertainty: US duties have disrupted India’s export competitiveness.
- Global Slowdown: Weak demand in advanced economies has reduced orders.
- China Dependence: Heavy reliance on Chinese imports for industrial inputs.
- Geopolitical Risks: Conflicts in West Asia and tariff disputes add volatility.
Risks and Challenges
- Exporters to US: Face reduced margins and declining competitiveness.
- Trade Deficit with China: Raises long-term concerns about supply chain resilience.
- Global Inflation: Rising oil prices and tariffs could further strain trade balances.
Future Outlook
| Scenario | Description | Potential Impact |
|---|---|---|
| Tariff Relief | US reduces duties after 150 days | Exports to US may recover |
| Continued Deficit | Imports from China remain high | Deficit widens, strategic vulnerability |
| Diversification | India expands trade with EU, ASEAN, Africa | Reduced dependence on US/China |
Conclusion
India’s export decline to the US and its record trade deficit with China highlight the dual challenges of tariff barriers and supply chain dependence. Policymakers face the urgent task of diversifying trade partners, boosting domestic manufacturing, and negotiating favorable trade terms to stabilize India’s external sector in 2026.
Disclaimer
This article is based on official commerce ministry data and analytical perspectives. It does not confirm or deny confidential government strategies and should not be interpreted as policy advice. Readers are encouraged to follow verified government and trade reports for authoritative updates.
