New Delhi: China has surpassed the United States to become India’s largest trading partner in August after a sharp drop in India-US trade due to the implementation of steep tariffs by the latter.

Total bilateral trade between India and China reached $12.1 billion in August, exceeding the $10.4 billion traded with the US during the same period, the Deccan Chronicle reported.

The shift was driven by a significant decline in trade with Washington. India’s exports to the US fell by 16.3% in August to $6.7 billion, down from $8 billion in July. Simultaneously, imports from the US dropped even more sharply, falling by 20.8% to $3.6 billion.

The decline coincides with US tariffs that escalated from 10% in April to 50% by late August. Of the 50% tariffs, 25% have been imposed due to India’s purchase of Russian oil.

While trade with the US shrank, India’s commerce with China expanded. Chinese imports into India saw a modest year-on-year increase of 0.67% to $10.9 billion, while Indian exports to China surged by 22.38% to $1.21 billion.

According to estimates from the think tank GTRI, India could lose $30-35 billion in US exports by the end of FY25-26 if the 50% tariffs remain in place, suggesting that China may hold the top position for the foreseeable future.

The US was India’s largest trading partner in the FY2022, 2023 and 2024. China previously held the top spot for several years, including FY21 and the period from FY14 to FY18.

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