US Reciprocal Tariffs: Boon or Bane for Textiles and Apparel?
By yash chouhan 2025-04-04 11:38:36
Opinion: Impact of US reciprocal tariffs on textiles and apparel sector – boon or bane?
The United States has imposed significant duties on textile imports from various countries with the aim of protecting domestic industries and addressing trade imbalances. Under the Trump administration, reciprocal duties of about 27% were imposed on Indian textile imports. The move is part of a broader strategy, where duties on competitors such as Vietnam (46%), Bangladesh (37%), Cambodia (49%), Pakistan (29%), and China (34%) appear to be even higher. These duties have reshaped the global textile trade landscape, potentially putting India in a more favourable position than its competitors.
Impact on Indian exports: The imposition of US tariffs presents both opportunities and challenges for the Indian textile industry. The positive side is that higher duties on competing countries provide India with a competitive edge, potentially increasing its market share in the US. In 2023-24, approximately 75% of the US textiles imports are expected to grow by 2024-25. Of the $36 billion in textile exports, the US accounted for about 28%, equivalent to about $10 billion. This favourable situation could increase export volumes and revenues for Indian manufacturers.
Impact on US consumption: However, tariffs also have an impact on US consumers. Higher import costs could lead to higher retail prices for textiles and apparel, potentially reducing overall consumption. This price sensitivity could result in a contraction in the US market, impacting demand for Indian exports. Conversely, some US consumers may turn to more affordable options, benefiting Indian exporters if they can maintain competitive pricing.
Growing US exports: The US textile and apparel industry has seen significant growth in exports due to rising global consumer demand for downstream textile products such as technical textiles and home textiles. In 2021, US exports of textile and apparel products grew by $3.4 billion (18.3%) to $22.3 billion. This growth was particularly notable in exports of fibers and yarns, which saw a 23.8% increase. This trend indicates strong demand for US textile products, which could impact global trade dynamics and affect Indian exports.
Forecasts suggest that the Indian textile sector will continue to expand, leveraging its competitive advantage in the US market. The industry’s ability to innovate and adapt to changing consumer preferences will be key in maintaining its growth trajectory. However, a short-term slowdown in the US market is anticipated due to tariff-induced price increases. Current Issues in the Industry Despite the opportunities presented by US tariffs, the Indian textile industry is already facing a number of challenges.
These include :
Environmental concerns : The industry contributes significantly to pollution, with high volumes of waste and chemical hazards.
Raw material shortages : Dependence on imported raw materials and rising costs pose significant risks.
Infrastructure constraints: Inadequate infrastructure and logistics challenges hinder efficient production and exports.
Labour shortage : The industry is grappling with labour shortages, which have been exacerbated by the pandemic.
Resolving these issues is critical for the long-term sustainability and competitiveness of the Indian textile sector.
In conclusion, the imposition of US tariffs on textile imports has had mixed consequences for the Indian textile industry. While it provides a competitive advantage over other exporting countries, it also presents challenges related to market contraction and increased costs. The future growth of the industry will depend on its ability to innovate, adopt sustainable practices, and overcome existing challenges. By strategically navigating these complexities, the Indian textile sector can thrive in the global market.
