High US Tariffs Apparel Sector Lead to Inventory Build-Up and Reduced Orders

In Focus

• U.S. tariffs apparel sector drives significant inventory build-up for Indian exporters
• Survey reveals widespread order cancellations and steep discounting pressures
• U.S. remains the top export market for India’s textile industry, contributing 28% of global shipments

The Indian textile and apparel industry is confronting unprecedented challenges following the U.S. imposition of 50% tariffs, creating operational and financial stress for exporters, according to a recent survey by the Confederation of Indian Textile Industry (CITI) as stated Business Today. The survey highlights significant inventory accumulation, widespread discounting, and declining order volumes, signaling a profound impact on the sector’s global competitiveness.

Rising Challenges in the Textile Export Market

A majority of respondents, approximately 85%, reported inventory build-up, reflecting reduced demand from the U.S. market. Nearly two-thirds of Indian exporters had to offer an average 25% discount to remain competitive under the new tariff regime. About one-third of survey participants experienced turnover declines exceeding 50%.

Key factors driving this downturn include:

• Discount demands from U.S. buyers (30%)
• Order cancellations or delays (25%)
• Reduced order volumes (20%)

The survey underscores the tangible effect of US tariffs apparel sector on India textile export challenges, leaving businesses to navigate heightened operational risks and liquidity constraints. Recently, Donald Trump has announced that a truck tariff will be imposed on all medium- and heavy-duty trucks imported into the United States starting November 1, 2025.

Regional and Market Impact

The U.S., which accounts for 28% of India’s global textile exports, has become less accessible due to the tariff structure. Exporters report that high tariffs are driving U.S. importers toward alternative sourcing countries with lower trade barriers. Recently, India has made trade concessions in a bid to prevent US tariffs.

Industry leaders are advocating for government support mechanisms to mitigate financial pressures. Measures such as loan moratoriums and collateral-free lending are being proposed to sustain operations and manage inventory build up textile exporters.

“Moreover, about one half of the respondents emphasised the need to enhance raw material competitiveness by removing import barriers such as quality control orders, import duties, and related restrictions, which they believe would help mitigate the adverse impact,” the survey found.

Economic Implications for Exporters

The tariff-induced pressures have direct implications on pricing, cash flow, and global competitiveness. Exporters are compelled to reduce margins to maintain U.S. market presence, while also facing delayed payments and lower volumes. This environment is expected to influence strategic sourcing and operational adjustments across the US tariff effect on the garment industry. In other news, Donald Trump claimed that the U.S. had “already secured commitments of $17 trillion coming in” during his first eight months. 

The current challenges signal a critical juncture for the Indian apparel export ecosystem. Businesses are adapting to reduced orders and heightened competition, underscoring the need for strategic measures and risk mitigation. Continuous monitoring of the survey on textile sector impact will be vital for decision-makers navigating evolving trade dynamics.