Top US buyers such as Amazon, Walmart, Target, and Gap Inc have suddenly halted consignments and have become cautious about placing fresh orders with leading Indian exporters like Gokaldas Exports, following the shocking raise in tariff announced by US President Donald Trump on Aug 6.
Several exporters told NDTV Profit that, over the past 24 hours, they have received emails and letters from their US clients, requesting them to pause the dispatch of outgoing consignments until further notice, even though some of these shipments were ready and scheduled to be sent off.
According to the management of Gokaldas Exports, brands have turned cautious on placing orders as the burden of rising tariffs, previously absorbed across the supply chain, is getting difficult to share, which has led to ongoing price renegotiations and partial pass-through to consumers, Gokaldas U.S. clients include GAP, Walmart and JCPenney.
Subdued pricing power is weighing on profit margins, and the company expects the impact to persist throughout the second half of this fiscal, according to a recent post-earnings conference call.
Key exporters of garments to bedsheets and towels including Welspun Living, Gokaldas Exports, Indo Count and Trident make 40-70% of their sales in the US. Higher tariffs could shift orders to Vietnam and Bangladesh, which now has lower U.S. duties of 20% each.
What’s At Stake?
Concerns are also mounting in Tirrupur, a textile hub in southern India, home to 20,000 manufacturing units, with over 2,500 producing ready-made garments for exports.
“My US buyer asked me to stop a shipment of cotton T-shirts and dresses worth $80,000, as it was not possible to pass the extra costs on to their clients… They want us to lower the price,” a Tiruppur-based exporter operating since 2002 said on condition of anonymity, citing business concerns.
Some exporters said they might offer some discounts to avoid inventory pile up and shoo away buyers. “Some buyers are also increasing end-retail prices, which could reduce demand, but a 50% increase is not sustainable.”
The US is the largest export destination for Indian textiles and apparel accounting for 28% of total exports valued at $36.61 billion in FY25. Between January to May, the US imported textiles and apparel worth $4.59 billion from India — a 13% increase compared to last year. India has a 5.8% share in the US garment market, behind China, Vietnam and Bangladesh.
On Wednesday, President Trump slapped an additional 25% tariff on India over its import of Russian oil, bringing the total levy to 50% — the steepest tariff the US has ever placed on a major Asian partner. While the first layer of duties has taken off, the new rate hits on August 27.
Trump’s latest tariff move has caused panic among exporters, who had hoped for a bilateral trade deal and were preparing for a rise in demand. Many of them even downplayed Trump’s tariff threats in the past, noting that imposing higher tariffs by the US would ultimately lead to increased costs for Americans — a situation that the US President may prefer to avoid.
But now as buyers start walking away, industry executives warn that sustained high tariffs could harm the domestic textile and apparel sector. Without a trade deal, such steep tariffs could cause 40-50% drop in US-bound orders, leading to $4-5 billion loss in yearly exports, they said.
“The proposed 50% tariff will increase the cost of Indian apparel by 30–35% compared to alternatives from countries like Bangladesh and Vietnam,” said Rahul Mehta, chief mentor of Clothing Manufacturers Association of India, which represents around 20,000 manufacturers and exporters. “Why would anyone pay such high rates? It’s a very stressful situation… Not only has existing shipments stopped, but we could also see a big drop in export orders, potentially leading to factory closures and unemployment.”
Exporters In A Race Against Time
To avoid the 25% additional duty, the goods must be cleared in the US by Sept. 16. In some cases, there is a rush to deliver to bypass the extra tariff.
“Only if an exporter opts for air freight, the cargo can arrive in time by paying the 25% duty,” explained Ajay Sahai, director general, Federation of Indian Export Organisations. “However, it takes 40-45 days for goods to reach the US when sent by sea… So even if the orders are dispatched today, no way one can escape from paying the whopping 50% tariff…these exporters are temporarily halting orders as they await some negotiations.”
The exporters fraternity is now pinning their hopes on some kind of agreement between India and US before September, putting an end to the trade uncertainty and giving them time to ramp up seasonal production.
A US delegation is expected to visit India for another round of talks from August 25 to 29. “Negotiations are the only way forward,” Sahai said. “If we can reach a breakthrough in a month, the damage will be less. Without a trade deal, we should expect setbacks in exports—that’s unavoidable.”
Trump’s revised tariff announcement has come “as a shock”, said A Sakthivel, chairman of Tiruppur Exporters Association. “When the tariff was first raised to 25%, buyers were still willing to negotiate discounts and share the extra cost… but 50% is arbitrary… We expect some kind of agreement will be reached between the two nations in the coming weeks.”
CMAI’s Mehta believes the 50% tariff could be transitory and seen as a “typical American bargaining tactic” to get what they want from its trading partner.
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