Trump’s Tariffs Put Indian Textile Exports Under Pressure

Trump’s tariffs have exposed vulnerabilities in over-dependence on a single export market, while the cotton duty suspension highlights the delicate balance between protecting exporters and safeguarding farmers.

The global textile trade has been shaken once again with the return of Donald Trump’s aggressive trade policies. Branded as “Trump Tariffs 2.0,” the measures mark a substantial escalation in the U.S.’s protectionist stance, leaving India’s textile and apparel sector, the backbone of its export economy, facing one of its toughest battles in decades.

Trump’s Tariff Strategy: The 50% Blow to India
In July and August 2025, President Trump announced a 10% baseline tariff on all imports into the United States, coupled with country-specific surcharges aimed at nations that continue strategic ties with Russia. India, which has maintained crude imports from Moscow, was hit particularly hard. The U.S. imposed a 25% reciprocal tariff and an additional 25% penalty tariff, effectively raising import duties on most Indian goods to 50%.

The numbers tell the story of the shock. India exported US$ 86.5 billion worth of goods to the U.S. in FY25, of which US$ 60.85 billion or nearly 70%, now falls under the higher tariff bracket. Within this, textiles and apparel (T&A) covering garments, home textiles, and made-ups worth US$ 8.3 billion, are among the worst hit.

What makes the situation graver is India’s position relative to its rivals. While Indian goods now face tariffs of up to 50%, Bangladesh and Vietnam pay only 20% on exports to the U.S., while Pakistan enjoys 19% duties on home textiles. This places Indian products at a staggering 30% cost disadvantage vis-à-vis Bangladesh, Vietnam and Pakistan, a gap too wide to bridge with productivity or efficiency gains alone. Moreover, China, despite being the main target of Trump’s tariff onslaught, faces 30% duties.
 
India’s Textile Hubs Under Strain
The shock is not uniform across the country but concentrated in India’s textile hubs, each facing its own battle.

Tiruppur – India’s Knitwear Capital
Tiruppur, Tamil Nadu, exports over Rs 30,000 crore of knitwear annually, much of it to the U.S. Exporters here warn that a basic cotton T-shirt once priced at US$ 2.50 to US$ 3, now lands in American ports with steep additional costs, pushing buyers to Bangladesh and Vietnam. Already squeezed by rising yarn prices and freight costs, Tiruppur’s exporters are now seeing contracts renegotiated at lower prices or cancelled altogether.

Ludhiana – Woollens and Hosiery Under Pressure
Ludhiana, Punjab’s hub for woollens, hosiery and winter wear, is staring at possible order cancellations ahead of the 2025–26 winter season. Larger firms may still pivot to European or Canadian markets, but smaller units, which depend heavily on U.S. buyers, risk shutting down if shipments fall sharply.

Surat – Input Costs and Synthetic Fabrics
Surat, the epicentre of India’s synthetic textiles and man-made fibre production, faces a double blow. On the one hand, apparel exports are slowing. On the other, imports of dyes, specialty yarns and chemicals, much of which come from China, are becoming costlier due to retaliatory tariffs. This threatens to ripple across Surat’s 6.5 lakh powerlooms, endangering both export and domestic supply chains.

Bengaluru – The Fast-Fashion Supply Chains
Bengaluru, home to India’s largest garment exporters servicing global fast-fashion brands like Walmart, Target and Macy’s, faces intense buyer pressure. Retail giants are demanding price cuts to offset tariffs. Exporters warn that without government support through rebates or incentives, profitability could erode by 8–10%.

Panipat – Home Textiles at Risk
Panipat in Haryana, known as India’s “Textile City,” counts the U.S. as a market for nearly 45% of its rugs, durries, towels and bed linens. With tariffs doubling costs, exporters fear a slowdown that cannot easily be compensated by diversions to Europe or the Middle East.

The Human Cost: Jobs On The Line
The Indian T&A industry is not just about exports, it is about livelihoods. The sector directly employs 45 million workers and supports another 60 million indirectly, making it the second-largest employer after agriculture. Unlike technology-intensive sectors, textiles remain deeply labour-intensive, with women and migrant workers forming the majority of the workforce.

With reports of U.S. buyers already diverting orders to Bangladesh and Vietnam, exporters warn that even a 10% drop in orders could lead to mass layoffs. Experts caution that a prolonged tariff shock could trigger wage suppression, labour unrest and unemployment, especially in small and medium enterprises.

As one Tiruppur exporter bluntly said, “The tariff has not just raised costs, it has put our survival on the line. For us, this is not about trade statistics, it’s about livelihoods.”

Industry Calls for Relief
Industry associations, including the Apparel Export Promotion Council (AEPC) and the Confederation of Indian Textile Industry (CITI), have urged government to act swiftly. Their demands include temporary subsidies or export rebates of 25–30% to bridge the tariff gap, expanded incentives under RoDTEP and RoSCTL schemes, fast-tracking FTAs with the EU, UK, Canada and Gulf nations and modernization of textile parks to improve productivity and reduce costs.

Policy experts also recommend pragmatic diplomacy. India may need to show flexibility on sensitive issues such as genetically modified (GM) crop imports and strengthen energy ties with Washington by sourcing more crude oil from the U.S.

Analysts note that this crisis could be a turning point much like the 1991 economic reforms, pushing India to modernize its textile sector, adopt sustainable practices and scale up R&D. Competing purely on cost is no longer an option; quality, speed-to-market, and innovation will decide survival.

The Tightrope Ahead
India’s textile and apparel sector now stands at a crossroad. Trump’s tariffs have exposed vulnerabilities in over-dependence on a single export market, while the cotton duty suspension highlights the delicate balance between protecting exporters and safeguarding farmers.

If India can leverage this disruption to diversify markets, conclude key FTAs, modernize its textile infrastructure, and balance farmer–industry interests, the crisis could become a springboard for long-term competitiveness. If mishandled, however, India risks losing its hard-earned position in the global apparel value chain.

The months ahead will decide whether Indian textiles emerge as resilient winners of this trade war or collateral casualties.