India-USA air cargo volumes plummeted 14% below three-month averages by mid-September, following implementation of President Donald Trump’s 50% tariff regime that took effect August 27, according to WorldACD Market Data.
The tariff increase from 25% to 50% was imposed to penalize India for purchasing Russian oil, creating immediate disruption in bilateral trade flows. Air cargo tonnages initially spiked 28% in the week before the tariff deadline as exporters rushed shipments, followed by consecutive weekly declines of 12%, 11%, and 8% through September 14.
The sustained decline has reduced India-USA air cargo volumes to 13% and 10% below equivalent weeks in 2024, reversing previous growth trends as American importers had increasingly sourced from India to diversify away from Chinese suppliers.
Trade diversion effects are evident as India-Europe air cargo volumes rose steadily, reaching 2% above previous year levels by early September before declining slightly in week 37. European routes have proven more resilient than USA destinations, offering Indian exporters alternative markets without prohibitive tariff barriers.
The tariff impacts sectors including textiles, gems, jewelry, auto parts, engineering goods, electronics, and pharmaceuticals, with Goldman Sachs estimating potential 0.6 percentage point reduction in India’s GDP growth.
Dubai has experienced parallel trade disruption, with USA-bound air cargo volumes falling 37% compared to July-August averages. The Middle Eastern hub’s decline may reflect broader regional trade pattern shifts, though Dubai-Europe volumes remain more stable despite 17% year-over-year decreases.
Global air cargo markets showed resilience in mid-September with 2% week-over-week growth offsetting regional declines. North America origins rebounded 11% following Labor Day disruptions, while Asia Pacific origins increased 2%, demonstrating continued demand despite bilateral trade tensions.
WorldACD data covering over 500,000 weekly transactions shows the tariff impact extends beyond immediate volume reductions to fundamental shifts in trade routing patterns. Chinese and Hong Kong routes to the USA have stabilized around 8% below previous year levels, with average spot rates of $4.58 per kilogram representing 14% declines from 2024.
The tariff regime affects approximately $48.2 billion in annual Indian exports to the United States, according to trade statistics. Major product categories facing the full 50% tariff include manufactured goods that previously benefited from competitive pricing advantages over Chinese alternatives.
Indian exporters are adapting through market diversification, with increased focus on European Union, Southeast Asian, and Middle Eastern destinations. This strategic pivot reflects broader supply chain reconfiguration as companies seek to maintain export competitiveness despite USA market access challenges.
Air cargo rates from China and Hong Kong to Europe averaged $4.21 per kilogram in September, approximately 4% below 2024 levels, suggesting competitive pressure from increased Indian export activity to European markets. This dynamic indicates ongoing trade flow redistribution across Asian origins.
As of mid-August 2025, tariffs remain at 50% with no formal resolution in sight, creating long-term uncertainty for India-USA trade relationships. The diplomatic crisis has implications extending beyond immediate commercial impacts to broader strategic partnerships.
Global air cargo capacity continues expanding 6% year-over-year, outpacing demand growth of 2%, contributing to sustained pricing pressure. Worldwide rates have remained flat at $2.42 per kilogram for five consecutive weeks through mid-September, consistently below 2024 levels.
Regional performance variations show Africa leading demand growth at 9% year-over-year, followed by Asia Pacific at 4%, Europe at 4%, and Middle East & South Asia at 3%. North America and Central & South America showed stagnant demand with zero growth compared to previous years.
The India-USA trade disruption illustrates broader trends toward supply chain regionalization as companies prioritize market access certainty over cost optimization. European and Asian markets have become primary beneficiaries of this trade diversion, potentially establishing new long-term commercial relationships.
Industry analysts expect continued volatility in India-USA air cargo volumes until tariff resolution or successful market adaptation strategies stabilize alternative trade routes. The current situation demonstrates how quickly geopolitical tensions can reshape established trade patterns and logistics networks.
Source: newsghana.com.gh
