Threads of a trade war

Trump's tariffs threaten to spin a crisis for India's textile and apparel industry, unless the country can leverage its raw material advantage and new trade deals

- SHINE JACOB

In a letter to Prime Minister Narendra Modi on August 16, Tamil Nadu Chief Minister M.K. Stalin raised an alarm. Up to 3 million jobs in the state's textile and apparel sector were at immediate risk, he wrote. Stalin pointed to the impact of the United States government's 50 percent tariff on Indian exports, which threatens livelihoods in a sector that employs 7.5 million people in Tamil Nadu.

While the chief minister's appeal focused on his state, the crisis is national in scale. The textile and apparel sector is India's second-largest employment provider, after agriculture, and it is now caught in a wave of uncertainty following the Donald Trump administration's tariff policy. Exporters have either halted shipments to the US or are fulfilling orders at a loss, while American retail giants including Walmart, Target, Amazon, TJX Companies, Kohl's, Gap Inc., and H&M have asked their Indian suppliers to hold consignments until tariff clarity emerges.

India is at a steep competitive disadvantage in the American market. While Bangladesh and Vietnam face tariffs of 20 percent, and Indonesia and Cambodia 19 percent, India is saddled with 50 percent. Even China, at 30 percent, fares better. Exporters fear not just a squeeze on revenues but also the prospect of ceding ground once again to rivals.

Data from January to June 2025 reflects this trend. According to the Confederation of Indian Textile Industry (CITI), India's exports to the US rose to $5.36 billion, up 12 percent from $4.79 billion during the first six months of calendar 2024, ranking the country third (see chart). Vietnam, now the second-largest supplier, registered $8.54 billion worth of exports, a rise of 19 percent. Bangladesh rebounded strongly after last year's political turmoil with a 24 percent surge to $4.36 billion. China, still the largest supplier, saw a 16 percent decline to $9.34 billion.