US 500% tariff threat: Garment exporters will ‘have to take risk’; traders brace for next shock

As Indian garment makers switch on machines for the next US fall-winter cycle, the industry is bracing for another potential shock, with the threat of a 500% tariff clouding export prospects and factory utilisation.

Exporters say buyer sentiment has shifted sharply in recent weeks. “Buyers who were earlier considering shifting some orders to India no longer want to come. They have started writing to us, asking what happens if this 500% tariff is imposed, who will take the guarantee,” Vijay Agarwal, chairman of the Cotton Textiles Export Promotion Council told ET. The concerns are enteering the spotlight even before the industry has recovered from the 50% tariffs imposed by the US last August.




Those duties pushed exporters into survival mode, marked by heavy discounting, diversion of unused capacity to domestic brands and the rerouting of overseas orders through neighbouring countries. The uncertainty deepened on Wednesday after US senator Lindsey Graham said President Donald Trump had cleared a Bill proposing 500% tariffs on countries that continue trading with Russia.

The US remains India’s largest market for apparel and textiles, accounting for 28–30% of exports. In 2024-25, India shipped apparel and textiles worth $37 billion. Since the introduction of the 50% tariffs, the sector has struggled to stabilise. Figures from the Confederation of Indian Textile Industry show that between April and November 2025, apparel exports inched up by just 2.28%, while textile exports fell 2.27%.

Despite the risks, manufacturers say halting production is not an option. “The situation remains highly uncertain as far as US tariffs are concerned. But we still have to manufacture the goods. We will have to take the risk,” Agarwal said.

Some companies have already absorbed losses to keep export lines running. “We offered deep discounts to keep exports going, hoping the issue would be resolved soon,” said Rajat Jaipuria, managing director of Kolkata-based Rajalaxmi Cotton Mills, which employs around 8,000 workers. The firm has now moved ahead with fall season production, but Jaipuria warned of severe fallout if the proposed duties are enforced. “We have now started production for fall season orders. However, a 500% tariff would effectively amount to an embargo,” he said. “We are unsure how factories can continue operating if exports to the US stop.”

For the upcoming season, US buyers have already begun scouting alternatives beyond India. Executives say stress signals are emerging in Tiruppur, the hub that contributes nearly 90% of India’s knitwear exports — underscoring the strain building across the supply chain.