Exporters Find New Havens As Trump Tariffs Take Effect

(MENAFN- Live Mint)

Indian exporters widened their horizons in August, more than offsetting the impact of stiff US tariffs that kicked in during the month. Driven by increased shipments to China, the Netherlands, Hong Kong and the UAE, overall goods exports hit $35.10 billion in August, up nearly 7% from a year earlier. Key drivers of the increase: Electronics, engineering products, pharmaceuticals and gems and jewellery.

Exports to China climbed 22.4% to $1.22 billion, while shipments to the Netherlands rose 17.9% to $1.83 billion, commerce ministry data showed. The UAE imported goods worth $3.35 billion from India, a 23.4% annual increase, and sales to Hong Kong saw a remarkable 62.5% surge to $584.7 million.

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Other notable gains came from Italy, which imported Indian goods worth $631.2 million, up 15.7%. Exports also rose to South Africa ($654.1 million, up 19.7%), Nepal ($617.3 million, up 14.4%), and Bangladesh ($874.6 million, up 16.2%).

In contrast, shipments to the US grew more modestly: Up 7.2% to $6.87 billion, markedly lower than the 19.9% growth reported in July, largely due to the tariffs imposed by the US on a wide range of Indian goods. Still, the US remains India's biggest trade partner.

Could some of these be exports to the US routed through other countries? Trade experts disagree.

Under Trump's differential tariff regime, a product's 'country of origin' has become crucial, as it determines the tariff rate on goods entering the US, said Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), an economic think tank.“For instance, a glass bottle manufactured in India faces a 50% US tariff. Shipping it via Singapore, which faces only a 10% tariff, does not alter its origin. The bottle will still attract the 50% tariff upon entry," Srivastava said.

“By contrast, if India exports sodium silicate, a raw material, to Singapore, and the bottle is manufactured there, with substantial transformation, in that scenario, the country of origin is Singapore, and the finished bottle would attract only a 10% tariff in the US," he added.

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The US imposed a 25% tariff on nearly all Indian exports, effective 6 August, followed by an additional 25% duty to punish New Delhi's purchases of discounted Russian oil in August.

The US tariffs are gaining traction, generating monthly revenues of roughly $30 billion, with India the hardest hit at a steep 50% duty since late August 2025, SBI Capital Markets said in its latest edition of EcoCapsule, a monthly analysis.“Yet, uncertainty persists after a US Appeals Court deemed the levies unconstitutional."

“The administration has escalated the case to the Supreme Court, leaving three broad outcomes: tariffs maintained, renegotiated, or scrapped. Until clarity emerges, trade policy volatility remains elevated, with key pressure points in autos, electronics, and textiles," it added.

To be sure, India's August exports were still lower than July's $37.24 billion.

In the first five months (April-August) of the ongoing fiscal year, India's total goods exports rose 6.2% annually to $349.35 billion. While the US remained the largest destination, other markets such as China (up 19.8%), Hong Kong (26.2%), and South Korea (10.2%) posted double-digit growth. European demand was mixed, with Germany registering an 11.7% rise, while the UK saw a decline.

Separately, the US in September introduced a 100% tariff on imported patented pharmaceuticals unless the manufacturer is building a production facility there. The effects of this measure are likely to appear in the October trade figures, while the full impact of US tariffs will be seen in September's data.

Meanwhile, exports to major trading partners such as Japan, Malaysia, Saudi Arabia, Brazil, France, Singapore and Australia fell in August, highlighting the impact of shifting global dynamics and market-specific pressures, confirming a broader shift during April-August period.

During the five-month period, India's exports showed strong growth across several key sectors, including primary goods. Mineral exports, including mica, coal, and other ores, jumped 16.6%, while marine products grew 16%. Meat, dairy, and poultry exports soared 20.3%. Tea shipments rose more than 18%, coffee by 16.4%, rice by 6.4%, and other cereals surged 22.1% year-on-year.

The commerce ministry data showed sharp regional variations in India's export basket from April to August.

Shipments to China were led by petroleum products worth $1.3 billion, followed by telecom instruments ($665 million), iron ore ($510 million), and marine products ($499 million). Spices added another $288 million.

Hong Kong continued to serve as a key hub for India's gem trade, with exports valued at $1.57 billion. Gold and other precious metals contributed $340 million, while telecom instruments added $237 million.

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The UAE imported $2.63 billion in gold, $2.55 billion in petroleum products, and $1.3 billion in telecom instruments. Shipments of pearls and other stones totalled $1.14 billion, while exports of ships and boats reached $560 million.

The Netherlands stood out as a major destination for Indian petroleum , with exports touching $5.4 billion. Germany's imports were more diversified, led by electrical machinery ($461 million), auto components ($250 million), ready-made garments ($220 million), and iron ore products ($211 million).

South Africa imported $996 million of petroleum and $716 million worth of motor vehicles, along with $271 million in drugs. Bangladesh's imports were dominated by cotton yarn ($673 million), petroleum products ($388 million), and a range of other commodities worth $666 million.

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