One Market Is a Risk: Lessons for Small Exporters From the Tariff Shock

The Tariff Shock of September 2025: Anatomy of a Downward Swing

Outlook Business reported on 16 October 2025, from commerce ministry data via PTI, that India's merchandise exports to the United States in September 2025 were US$5.46 billion, down 11.93%, while imports from the US were US$3.98 billion, up 11.78%. For April to September 2025-26, exports to the US were US$45.82 billion, up 13.37%, and imports US$25.6 billion, up 9%. The US had imposed a 50% tariff on Indian goods from 27 August 2025.

For thousands of Indian MSMEs in textiles, home furnishings, leather goods, and engineering sub-components, North America had long represented the default export destination. The American retail market offered massive order scale, standardized product specifications, and reliable dollar clearing. However, when Washington abruptly imposed a 50% tariff on Indian manufactured imports in late August 2025, the vulnerability of extreme geographic concentration became brutally apparent. Within weeks, retail buyers in New York and Chicago paused shipments, renegotiated contracts, or diverted purchase orders to Southeast Asian competitors.

Dissecting the Impact Across Sectors and the Divergence to Alternate Markets

The tariff effect in the data: The Global Trade Research Initiative said US-bound shipments fell 17.9% from US$6.87 billion in August, the sharpest monthly drop of 2025 and the fourth straight monthly decline. Its Ajay Srivastava was quoted: "September was also the first full month in which Indian goods faced Washington's 50 per cent tariff on most products." Exports to the US had fallen monthly since June 2025, with May the last month of growth, up 4.8% to US$8.8 billion. From May to September, exports to the US dropped nearly 37.5%, a loss of over US$3.3 billion in monthly shipment value. The hardest-hit categories were textiles, gems and jewellery, engineering goods and chemicals. The two declines, 11.93% and 17.9%, use different comparison bases, and the report did not say what the first was measured against. Meanwhile, exports to China rose 34.18% to US$1.46 billion.

“September was also the first full month in which Indian goods faced Washington's 50 per cent tariff on most products.”

The 2026 Export Rebound and the Trade Agreement Counter-Offensive

The later claim: KNN India reported on 10 September 2026 that Commerce Minister Piyush Goyal said merchandise exports grew "upwards of 15 per cent" from April to August 2026, with goods exports comfortably above US$200 billion, against US$183 billion in April to August 2025. Official data cited by the report showed April to July 2026 exports up 17% to US$174 billion. The 15% figure is the minister's statement, which the report did not independently verify, and it did not explain what drove the growth. Goyal said India had given preferential market access to 38 developed economies over about four and a half years and planned to extend this to 60 to 75 economies over the next year and a half, and that India had concluded eight trade agreements in five years, including with the UK, the EU, EFTA, New Zealand and Australia, with agreements with Oman and the UK implemented this year.

We cannot say from these two sources how the US tariff situation has evolved since late 2025; our Enterprise coverage of the US trade deal addresses that separately, and readers should check current rates.

Five Strategic Lessons on Geographic Concentration: Our Analysis

1. Concentration is the risk: A firm that sells 80% of its goods to one country is exposed to that country's tariffs, politics and demand. Ask what share of your sales comes from your biggest market.

2. Diversify slowly and deliberately: Adding a second market means new buyers, certification, logistics and payment terms. Treat it as a project with a budget, not a sideline.

3. Use trade agreements: Preferential access can lower duties, but you must meet rules of origin and document them. Learn the requirements for your product.

4. Aggregate numbers hide winners and losers: Total export growth can coexist with distress in a particular sector or district. Look at your product category and markets, not at the national figure.

5. Prepare for price pressure: When a buyer faces a tariff, it may press suppliers to cut prices. Know your cost floor before you negotiate.

A Four-Phase Diversification Action Plan for the Small Factory

An action plan: our suggestion • Month 1: Calculate market shares in your sales. Identify a second and third target market where demand for your product exists. • Months 2 to 3: Research tariffs, standards and buyers. Use the support described in EX2 and EX3 for certification and market visits. • Months 4 to 6: Send samples, quote on safe payment terms and begin a pilot order. • Month 7 onward: Review margins and reliability; decide whether to scale or adjust.

Cautions: Trade data are revised, and one month does not make a trend. We have used a 2025 report and a 2026 ministerial claim, and have not independently checked either. Policy may have changed since.

For associations: Share market intelligence among members, including buyer lists, certification requirements and freight options. Joint participation in trade events can lower costs.