Indian Suppliers Face Uncertainty Amid U.S. Tariff Threats

In a climate of escalating trade tensions, Indian suppliers are bracing for the impact of potential tariffs that could drastically alter their market prospects in the United States. The recent Sourcing at Magic trade show in Las Vegas highlighted the growing unease among Indian exhibitors, who are grappling with a mix of uncertainty and dwindling participation.

For the past year, negotiations between the U.S. and India have been marred by a lack of clarity and aggressive posturing, particularly from the U.S. side. After initially imposing a staggering 50 percent tariff on Indian goods in 2025, the U.S. government has attempted to engage in discussions for an interim trade agreement. However, in a troubling development, a new 10 percent tariff has been introduced following a U.S. Trade Representative investigation into forced labor practices, adding to the existing pressures.

The situation worsened when the Senate passed the Lindsey O. Graham Sanctioning Russia Act of 2026, targeting countries like India that continue to purchase Russian oil, which may lead to even higher tariffs of up to 100 percent on Indian exports such as apparel. Kunal Modi, manager at Banbury Exports, expressed concern, stating, "If a 100 percent tariff is levied on Indian products like apparel, then the market is closed for India."

Varun Modi, Banbury's vice president, noted the adverse effects of these tariffs on business. He remarked, "Presently, due to the tariffs, there has been uneasiness. Many things have been halted, so it’s not as smooth as it used to be." This unease was reflected in the trade show attendance, which saw a decline from around 85-90 exhibitors from India in past years to just 50 this year.

Participants at the show were primarily existing buyers, hesitant about placing new orders due to the looming tariff situation. Kunal Modi shared that last year’s tariffs led to canceled orders and strained relationships with brands, causing significant losses for suppliers. "Whatever happened took a lot of time to clear up. One full year was wasted because of that," he said.

As suppliers contemplate shifting their focus, Varun Modi pointed towards Europe and the U.K. as potential new markets, especially following the recent free-trade agreement between the U.K. and India. However, the outlook for success in the U.S. remains dim, with Kunal Modi noting, "There’s too much ambiguity… People are not sure about the future."

Rupesh Badiani, a partner at Fashion Fantasy, echoed these sentiments, stating that the tariffs have led to layoffs among clients and forced companies to tighten their operations. He revealed that many brands are now consolidating suppliers and reducing their collections to mitigate costs.

In response to the uncertainty, Fashion Fantasy has adjusted its business model, requiring longer lead times and operating on a made-to-order basis to minimize financial risk. Badiani explained, "As soon as you order, we will purchase the fabric. We won’t start our expenses until we get a written confirmation. Everyone’s put their hand into the fire before."

Despite the challenges, there is still a magnetic appeal to the U.S. market. Badiani acknowledged that while the allure of the U.S. has diminished, it remains a significant opportunity due to its size and potential for growth. He remarked, "If you have four stores in California, you’ve still got a good business going." As Indian suppliers navigate these turbulent waters, they are determined to explore every avenue to reclaim their footing in a market that, despite its challenges, still holds promise.

Source: wwd.com