The latest government data from New Delhi reveals that India's merchandise trade deficit considerably expanded in July. This increase was primarily driven by a significant rise in imports, even as merchandise exports saw growth just before President Donald Trump announced new tariffs on trading partners, including India.
In the period from April to July, exports to the U.S. climbed to $33.53 billion, up from $27.57 billion in the previous year. Recently, Trump implemented an additional 25% tariff on Indian goods due to Delhi's ongoing purchase of Russian oil. This move has now brought the total tariffs on Indian exports to the U.S. to 50%, making it one of the highest tariff rates imposed on any U.S. trading partner.
According to the government data, the trade deficit in July, as measured by INTRD=ECI, stood at $27.35 billion. This figure exceeded economists' forecasts of $20.35 billion and was significantly higher than the $18.78 billion reported in the previous month.
The data further revealed that exports of goods reached $37.24 billion in July, indicating growth from the $35.14 billion recorded in June. Simultaneously, imports surged to $64.59 billion, a notable increase from the $53.92 billion reported in the previous month.
The significant expansion in the trade deficit highlights the impact of escalating tariffs and increased import activity. As India navigates these challenges, analysts will closely monitor the economic repercussions and potential measures to address the growing trade gap.
