Instead, they have cut the volumes of exports by 18-24 per cent relative to other destinations.
As a result it is the Americans who have to bear the bulk of the increase in tariffs, according to a latest research paper released by the Kiel Institute of World Economy, based in Germany.
Kiel’s conclusions are twofold. One, if Indian exporters were absorbing part of the increased tariffs, their US-bound prices would fall relative to shipments to other geographies (Europe, Canada, and Australia) that did not face tariff increases. But this did not happen.
Two, it compared Indian exports to the US and to the European Union (EU), Canada, and Australia, which did not impose any fresh tariffs on India in this period. The conclusion: Values of export units to the US remained unchanged relative to other destinations.
However, this does not mean India has no worries on its plate. In December Indian exports to the US fell 1.83 per cent year-on-year to hit $6.88 billion. And Indian exports of gems and jewellery showed a sharp fall of over 44 per cent between April and December last year.
The institute studied the shipment data of over 25 million transactions and $4 trillion in trade value across the world (from January 2024 to November 2025). The study showed only 4 per cent of the tariff burden globally was absorbed by exporters while 96 per cent was paid by US citizens.
Kiel undertook a specific case study on India, which, it says, faced sharp, sudden tariff increases in August last year across most products — a 25 per cent tariff on August 7, rising to 50 per cent on August 27 — to understand who bore the burden of the tariffs.
The study is significant because US President Donald Trump had said his tariffs would help the country to raise revenues, which would be paid by exporters.
So, why did the exporters not absorb the tariffs? One, Kiel says one reason is that India could find alternative buyers of goods not competitive in the US. Two, an exporter would need to cut prices by 33 per cent just to offset the 50 per cent tariff — a margin cut that would make them unprofitable to sell in the US. So they preferred to maintain margins even if it meant lower sales.
Three, many importers in the US have longstanding relations with foreign suppliers and cannot switch to alternative sources.
Kiel pointed out that the key conclusions were that the tariffs were a “tax” on Americans and the view that the foreigners paid the tariffs was empirically false.
Trade volumes, not prices, adjust, it said. Supply chains bear a significant cost (like US companies importing inputs), and tariffs do not transfer wealth from foreigners to Americans. And prior research on tariffs in 2018-20 shows a near-complete pass through of tariffs during the first trade war.
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