Garment Exporters Reeling as US Tariffs Risk Mass Cancellations

A wave of panic has gripped India’s $16 billion garment export industry following the United States’ decision to impose steep tariffs on Indian goods. Announced by U.S. President Donald Trump, the new tariffs have sent shockwaves through the sector, prompting urgent calls from American retailers to Indian manufacturers — and a scramble to shift production overseas.

Pearl Global, one of India’s leading garment exporters with clients including Gap and Kohl’s, has been inundated with late-night calls from anxious U.S. buyers. Their message: absorb the tariff hike or relocate production to avoid it.

“All the customers are already calling me. They want us to shift from India to other countries,” said Pallab Banerjee, Managing Director of Pearl Global, which operates manufacturing facilities in Bangladesh, Indonesia, Vietnam, and Guatemala — nations currently exempt from the new U.S. duties.

Retail giants like Walmart, Amazon, and Target have reportedly halted new orders from India, with many buyers pressing suppliers to relocate or risk losing business. In a matter of weeks, India’s once-promising edge in the global apparel market has been severely blunted.

From Opportunity to Crisis

Earlier this year, India’s garment sector had been poised for growth. Trump’s initial tariff structure proposed in April had favored India over competitors like Bangladesh, Vietnam, and China, offering an opportunity to expand U.S. market share. But diplomatic tensions and India’s continued purchase of Russian oil have flipped the narrative.

Now, Indian goods face a staggering 50% tariff — a combination of an initial 25% hike that took effect last week and an additional 25% set for August 28. In comparison, tariffs on Bangladeshi and Vietnamese goods stand at 20%, and Chinese exports face 30%.

The sudden shift has thrown exporters into turmoil. For Pearl Global, nearly half its business comes from the U.S. “Some clients said they’d keep buying if we shared the tariff cost,” Banerjee admitted, “but that’s just not viable.”

‘Industry in the Doldrums’

The impact is even more severe for exporters without international production options. RichaCo Exports, which ships nearly $111 million worth of garments annually to the U.S. from its factories across India, finds itself cornered. Ninety-five percent of its Indian revenue comes from American buyers.

“We’re exploring setting up a manufacturing base in Kathmandu,” said General Manager Dinesh Raheja. “The industry is in the doldrums.”

Other major Indian exporters are also eyeing overseas facilities. Raymond is banking on its Ethiopian unit — which faces only a 10% tariff — to step up production. Titan, India’s largest jeweler and watchmaker, recently revealed plans to relocate some operations to the Middle East to maintain access to the U.S. market.

Tiruppur’s Sudden Fall

Tiruppur, the knitwear capital of India responsible for nearly a third of the country’s apparel exports, has felt the tremors most acutely. Just months ago, confidence in the hub was high as global buyers looked to India amid political instability in Bangladesh and efforts to diversify away from China.

Today, that optimism has been replaced by uncertainty and stalled orders.

“An importer that had ordered underwear told us to stop if we haven’t purchased yarns yet,” said Naveen Micheal John, executive director at Cotton Blossom India.

Many suppliers are now racing to ship as much as possible before the full tariff kicks in. With basic garments like T-shirts priced at $3.50–$5, the 50% levy could significantly erode competitiveness, exporters warn.

N Thirukkumaran, general secretary of the Tiruppur Exporters’ Association, summed up the mood: “We’re facing one of the biggest challenges in recent history.”

A Blow to ‘Make in India’

The ripple effects extend far beyond individual companies. India’s “Make in India” policy, a cornerstone of Prime Minister Narendra Modi’s economic vision, is under threat as manufacturers increasingly consider shifting production overseas.

Already grappling with labor shortages and capacity constraints, India’s garment sector now risks losing ground just as it was emerging as a serious player in global supply chains.

New Delhi has condemned the tariffs as “extremely unfortunate,” but with the second phase of the hike looming, exporters say immediate relief is unlikely.

As garment factories across the country face a wave of cancellations and production suspensions, one thing is clear: India’s position in the global apparel market is hanging by a thread.