By: Seshadri Ramkumar, Professor, Texas Tech University
On August 27, 2025, the United States imposed a secondary tariff of 50% on imports from India (excluding pharmaceuticals), reshaping trade dynamics between the two nations.
The U.S., leveraging tariffs as a geopolitical and economic tool, has directly impacted India’s textile and apparel sector—the second largest export category to the U.S. after mobile phones. With India annually exporting about US$ 9–10 billion worth of textiles and apparel, this move threatens millions of jobs, particularly in states where textiles form the economic backbone.
Industry associations and stakeholders have appealed to both the central and state governments, urging fact-based representations to counter the negative impact. The Government of India, under Prime Minister Narendra Modi, has outlined a four-point strategy while negotiations are ongoing.
Diplomacy, negotiation, and engagement are emerging as the key pathways forward. Quiet diplomacy with nations such as Japan and China, coupled with the arrival of U.S. Ambassador-designate Sergio Gor, signals momentum for renewed dialogue. Successful negotiations could lower tariffs to 15–20%, leveling the playing field with competitors like Vietnam and Bangladesh.
India’s recent decision to suspend cotton import tariffs until year-end is a strategic move, signaling goodwill and offering leverage in discussions. This also opens opportunities for U.S. cotton exporters, as Indian mills actively seek competitively priced, quality cotton. Jayalakshmi Textiles, for example, has already secured 550 tons of imported cotton, citing competitiveness against local supply.
For the U.S., this provides access to India’s vast cotton market, aligning with President Trump’s agenda of boosting U.S. agriculture exports. For India, it balances trade dynamics without severely affecting domestic cotton farming, which has already reached peak land allocation.
While short-term disruptions are inevitable—higher U.S. consumer prices and reduced Indian exports—the long-term outlook hinges on positive, pragmatic engagement. Cotton trade could emerge as the breakthrough factor, easing tensions and paving the way for broader agreements.
With 25 years of steady efforts in building trust, both nations are expected to find common ground soon. As Prof. Ramkumar notes, “Negotiations in the textile space will be key to breaking the ice in overall trade talks, offering hope for a renewed start.”