India’s exports to China surge in December, shipments to U.S. decline

India’s exports to China soared in December while shipments to the U.S. declined as President Donald Trump’s steep tariffs prompt New Delhi to focus on alternative markets.

Exports to China surged 67% in December to $2 billion, in contrast to goods shipped to the U.S. — New Delhi’s biggest export market — that dropped 1.8% to $6.8 billion, according to government data released late Thursday.

The U.S. has slapped 50% tariffs on New Delhi, among the highest on any country and even more than on China, upending both the trade and diplomatic relations between the two countries.

During the first nine months of the fiscal year ending March 2026, India’s exports to mainland China have risen nearly 37%, while shipments to Hong Kong have jumped more than 25%.

Earlier this week, India’s Foreign Secretary Vikram Misri met Vice Minister of the International Department of the Communist Party of China Sun Haiyan in New Delhi to discuss the “progress made in stabilizing and rebuilding bilateral ties with priority on business and people-centric engagements.”

Relations between the two countries have been thawing since Prime Minister Narendra Modi and Chinese President Xi Jinping met at the Shanghai Cooperation Organization summit in September sharing a vision of being partners not rivals.

China has emerged as India’s largest goods trading partner, doing business worth $110.20 billion between April and December 2025, upstaging the U.S. at $105.31 billion, data from the India’s commerce ministry shows.

But India’s widening trade deficit with Beijing and border disputes have been a bone of contention between the two. The country’s trade balance with China is in sharp contrast with the U.S.

New Delhi runs a trade surplus with Washington, while it’s trade deficit with Beijing has been soaring. During April to December, India’s trade surplus with the U.S. was more than $26 billion, deficit with China stood at $81.7 billion.

In fiscal year 2025, India traded goods worth $131.84 billion with Washington and $127.71 billion with its Asian neighbor, not accounting for Hong Kong.

India’s merchandise trade deficit for December rose 21.4% year on year to $25 billion. The country’s merchandise exports in December rose 1.9% while imports grew 8.8% compared to a year ago.

However, the deficit was lower than a Reuters poll estimate of $27 billion.

Exports had registered a surprise growth of 19.4% in November, with shipments to the U.S. rising 22.6% amid hopes a possible deal.

India’s trade secretary Rajesh Agrawal on Thursday said that New Delhi was “very near” to finalizing a deal with Washington but refused to put a deadline to it, according to domestic media reports.

Despite the two sides being engaged in negotiations for months, a deal has been elusive. U.S. Commerce Secretary Howard Lutnick on a podcast last week said the India–U.S. trade deal…