U.S. Trade Deficit With India Is Limited to Goods

Tariffs of 50 percent on Indian goods exported to the U.S. came into effect today – the highest in the world together with duties on Brazilian wares. Both nations have been singled out by the Trump administration for certain actions running afoul of its agenda. For Brazil, it’s the prosecution of former President Jair Bolsonaro in connection to an allegedly planned coup, while for India, it’s the increased purchases of Russian oil in the aftermath of the country’s invasion of Ukraine.

Additionally, U.S. President Donald Trump has been lamenting the United States’ trade deficit with India – like he has done with many other countries. In 2024, U.S. goods sold to India were almost $46 billion less valuable than Indian goods sold to the United States. However, when looking at services – a strong suit of the American and the Indian economy – the trade balance of the two nations has been almost level since 2023.

Indian services exports to the U.S. (and the world) represent many increasingly sophisticated and well-paid jobs that are more important to the global operations of multinationals than ever. While services exporters will not be immediately affected by the new tariffs, many fear that there could be consequences in the long run, The New York Times reports. The situation is even more pronounced in the European Union, which is running a goods trade surplus and a services trade deficit with the U.S. that nearly cancel each other out. Yet, the bloc had to make big concessions to Trump’s administration when agreeing on a trade deal in late July.

Indian goods exporters meanwhile told the BBC that they feared layoffs, the inability to pay workers, unsold stock piling up and giving up their businesses altogether as the new tariffs are hitting at a time when manufacturers would usually start the holiday season scramble. Some echoed the desire for a India-U.S. trade deal, which has been discussed at length, but hasn’t materialized yet.