Daybreak - US consumers may not notice the ‘Made in India’ tag, but after Trump's tariffs, their wallets will

Episode Date: July 31, 2025

A 25% tariff on Indian textiles maybe a blow to India’s exports but that’s only half the story.The latest trade move by Donald Trump could hit closer to home for American consumers. India is the third-largest supplier of apparel and home textiles to the U.S. after China and Vietnam. Both countries already face heavy tariffs from the US. Together, China, Vietnam, and India account for nearly 60% of American clothing imports.So what happens when all three get taxed?In this episode, we examine the possible ripple effects on American retailers, sustainable fashion, small brands along with the average Target shopper. Meanwhile, India isn’t sitting quietly. It’s already diversifying into Europe, Africa, and other regions.Is this really about bringing back American jobs? Or will U.S. consumers be made to foot the bill?Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me. My interruptions, my analogies and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganesh, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get an alert as soon as we release our first episode, please follow Intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. At this point, if we had a dollar for every time somebody set tariff, we could afford to pay Trump's 25% tax ourselves and still buy a few t-shirts.

But jokes aside, when America, taxes Indian clothes is the Americans who will end up paying more at checkout. Because, and you know this, India has been quietly helping keep American closets full and fashionably affordable for a while now. Am I being dramatic? Maybe a little bit. But I'll tell you what's happening. India exports nearly $10 billion worth of textiles and apparel to the United States every year.

That includes cotton t-shirts, bed linen, embroidered fabrics, baby clothes, you name India is the third largest supply of these products to America. The top two are China and Vietnam who already face stiff U.S. tariffs. So, when the U.S. decides to slap a 25% tariff on Indian exports, which includes textiles, it's not just risking 10% of its supply. It is squeezing 60% of its total import market. Now, this tariff hike by the President Donald Trump is being pitched as a way to bring jobs back to America. But here is what no one is talking about.

India loses a customer, but American shoppers lose a supplier, and an important one at that. Retailers will not absorb these costs forever. Shoppers will. So in this episode, we flip the question. It's not about how will India cope, because India is already diversifying. It is signing deals with Europe, Africa and other Arab countries.

Instead, we ask, what happens to the American shopper, the person picking up a cotton t-shirt at Target or a bedsheet at Macy's, when one of their most reliable and affordable sources is suddenly considerably more expensive. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nickha Sharma, and I Don't Chase the News Cycle. Instead, every day of the week, my colleague, Rahil Filippos and I will come to you with one business story that is worth understanding and worth your time.

Today is Friday, the 1st of August. Let us start with the short-term effects of a 25% tariff on Indian textiles. In simple terms, prices are going to go up. US retailers source most of their clothing from abroad. In fact, more than 90% of it comes from outside of America. And India happens to be the third largest supply of cotton apparel and home textiles. According to a Texa or the Office of Textiles and Apparel in the US, Indian Textile and Apparel exports to the country.

were worth around $10 billion in 2023. Plus, let us not forget that interest in India is rising. A lot of brands in the U.S. see India's quality finishing, diversity of cotton fabrics and integrated mills as advantages. Now, add all of that to this. According to the U.S. International Trade Commission, Vietnam and China together made up nearly 50% of U.S. apparel imports in 2023. And the US already has tariffs on Chinese imports thanks to Trump's trade wars that haven't fully

ruled back. Vietnam too has faced increased scrutiny and supply chain complications. So now, with India included, nearly 60% of all US clothing imports are under pressure. Basically, a huge chunk of the American retail supply chain is at risk. The short-term consequence of this may send retailers scrambling. They might absorb the costs temporarily. shift supply orders to other countries or raise prices. For example, Bloomberg reported that a 10 to 15% cost increase in textiles often results in a 5 to 20% retail price hike depending on the product and the brand.

So a $10 t-shirt at Walmart could now sell for $11 or even $12. And the change does not stop there. Multiply that across entire product lines and the impact on the average American shopping bill is hard to ignore. Also, it is not that simple to just switch. India is the go-to for specific products, cotton garments, embroidered fabrics and increasingly eco-friendly fashion. Alternatives like Bangladesh and Mexico cannot easily fill the gap at scale or quality. In the long term, there are deeper consequences. Shoppers might see less variety in stores. Brands may cut back on sustainable or artisan alliance sourced from India.

Inflation may go up and supply chains will grow more fragile. Don't take my word for it. The Peterson Institute for International Economics found out that tariffs imposed during the U.S.-China trade war between 2018 and 2020 added nearly $60 billion in costs to U.S. consumers. So what is India's response to all of this? Don't play victim. Instead, pivot.

New trade deals with the U.S. UAE, Australia and the EU are already in the works. Indian exporters are actively shifting focus to the Middle East, Africa and Latin America, and building strong regional brands. The US may soon find that what it once took for granted, which is affordable, high-quality Indian textiles, will be harder to come by. So in the next segment, we will get into the details. Which products and which people are likely to feel this pinch?

Like I told you earlier, India dominates the country. cotton apparel category. Shirts, t-shirts, undergarments, children's clothing, many are sourced from Indian mills. According to a taxa, more than 55% of Indian apparel exports to the US are cotton-based. So there is a decent chance that an American who buys basics at Target, Gap or H&M is wearing something that is made in India. These prices will be going up in the future. Next up is home textiles. India supplies about 40% of of U.S. bed linen, towels, and curtains. These are bulky, heavy products that cost more to make elsewhere. So prices here could spike noticeably, especially for middle-income families who are

trying to furnish their homes. And then there are embroidered, artisanal and handcrafted pieces. These often come from India's small and medium enterprises. So U.S. boutique brands that depend on unique Indian craftsmanship could be forced to cut product lines or raise prices significantly. And let's not forget sustainable fashion. India is fast becoming a leader in organic cotton, low waste production and natural dyeing. So American Genzi and millennial shoppers who prefer these products will likely see fewer options or higher costs. Small indie fashion brands and ethical labels in the US will suffer disproportionately. These companies typically operate with very thin margins because they pay premiums for organic, handcrafted fabric,

and fair labor. The new tariffs will end up eroding their pricing model. And now, let's talk about the people who will feel the pinch. Budget shoppers, especially in working class households, will be the first to notice, because they rely on low-cost, decent quality clothing. Even a $3 increase per item adds up quickly for a family of, say, four. And then there are the fast fashion buyers, teenagers, students, young adults who expect low prices and trendy variety. This group might see fewer options or high prices or both. And regions like California, New York and Texas, which import large volumes of Indian goods might feel the impact even more across local retail chains.

So, let's take a step back. A 25% tariff on Indian textiles may look like a policy aimed at protecting domestic workers, but the broad sense is clear. Import tariffs end up as tax on Americans. In theory, the government collects tariff dollars, but because importers raise their prices, consumers and businesses pay more out of their pockets. Now, all of this is not to say that India is not going to be impacted.

US is, after all, India's biggest market for textile exports, nearly 17%. A sudden price disadvantage could lead to order cancellations, factory slowdowns and job losses, particularly in cotton-rich states like Gujarat and Tamil Nadu. But like I said earlier, India is already doubling down on trade with other parts of the world. So this squeeze may actually help us diversify our markets faster. So in the end, it's not just about clothes. It is about a global economy that is becoming more fragmented, more expensive,

and harder to navigate for both sellers and buyers alike. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. To subscribe, head to the Ken.com and click on the red subscribe button on top of the Ken website. Today's episode was hosted by Sniktha Sharma and edited by Rajiv Sien.