Apparel exporters are expressing serious concerns about potential job losses and market instability due to the uncertainty surrounding U.S. tariffs in 2026. The industry, particularly in countries heavily reliant on the U.S. market, faces significant disruption.
The U.S. has implemented substantial tariffs on a wide array of goods, impacting its trade partners and marking a shift from previous trade liberalization policies. Effective tariff rates, calculated as import duties collected divided by the total value of goods, have risen since early 2025. These tariffs, which in some cases started at 145% and were later lowered to around 50%, are reshaping global trade dynamics, forcing brands and suppliers to adjust rapidly.
The Apparel Export Promotion Council (AEPC) has voiced strong concerns about the severe disruption to textile exports, especially from India, due to recent U.S. actions. These actions include imposing a 25% tariff and an additional 25% oil-related penalty on imports. The AEPC warns that without immediate resolution, the sector could face order stoppages, job losses, and a permanent loss of market share. They also highlight that the U.S. market accounts for approximately 70% of exports for several large Indian textile exporters.
The increased tariffs have led to a decline in U.S. apparel imports from certain countries. For example, U.S. apparel imports from India declined by nearly 30% in October 2025, demonstrating the negative impact of high tariffs on the country's appeal as a sourcing destination. Meanwhile, countries like Vietnam, Bangladesh, Cambodia, Indonesia, and Pakistan have gained additional market share, reflecting a sourcing diversification strategy by U.S. fashion companies.
The textile industry operates on thin margins, making it difficult to absorb prolonged tariff shocks. To maintain production continuity and retain U.S. customers, some exporters have already absorbed price reductions, depleting their profits and reserves. The AEPC has urged the Indian government to intervene, emphasizing the urgent need to address the India-U.S. tariff issues to protect the country's textile exports. The council has also reached out to Vice President C.P. Radhakrishnan, seeking support for the apparel garment industry.
The uncertainty surrounding U.S. trade policies is prompting companies to make price changes, shift sourcing strategies, and improve efficiency. Larger suppliers are pursuing footprint optimization, digitization, and automation, while smaller players face mounting pressure. Some companies are also exploring alternative sourcing destinations to mitigate the impact of tariffs. For instance, faced with increased tariffs on Chinese imports, some purchasers have shifted to suppliers in other countries with lower tariffs. This is evident in the moderate increase in apparel and leather product imports from other Asian economies.
Looking ahead, the tariff landscape for the U.S. market is expected to be more stable in 2026, but at higher prices. U.S. supplier executives anticipate that increased wholesale and retail prices will hold, although there may be some adjustments throughout the year. The long-term impact of tariffs is expected to result in higher U.S. consumer prices, as U.S. importers cannot quickly change long-term agreements with suppliers or shift production outside of certain countries.
While the challenges are significant, agility, innovation, and strong change management will be critical for brands and suppliers to maintain their competitive edge in this evolving landscape.
