Trump and Modi’s Trade Detente: What the New U.S.–India Tariff Reset Means for Apparel Sourcing
This week, the United States signaled a major de escalation in its trade posture toward India after talks between Donald Trump and Narendra Modi. Multiple major outlets report the U.S. will reduce its tariff rate on Indian goods to 18 percent, and that an additional “punitive” tariff layer tied to India’s purchases of Russian oil is being removed following India’s commitment to stop buying Russian crude.
At the same time, details are still fluid, with some reporting emphasizing very large purchase commitments and “zeroing” certain Indian import barriers on U.S. goods, while others note the fine print is still being finalized.
What appears to be on the table
Based on the most consistent reporting so far:
U.S. import tariffs on India: reduced to 18 percent (from a higher prior level), with an extra punitive layer removed.
Energy and geopolitics are the lever: the tariff relief is explicitly linked to India stepping away from Russian oil purchases, and shifting supply toward the U.S. (and potentially Venezuela).
Trade pledges: some outlets report very large headline commitments (for example, major increases in purchases of U.S. goods). Others highlight skepticism on feasibility given recent total bilateral trade volumes.
Important nuance: You may see different “before” tariff numbers in headlines (some citing 25 percent, others referencing higher effective levels). That is usually because reporting is mixing (1) baseline “country” tariffs, and (2) additional punitive layers imposed for geopolitical reasons.
Why this matters for apparel brands
1) India just got “cheaper” on paper, but volatility is now the story
If Indian exports to the U.S. truly move to an 18 percent tariff environment, India’s cost curve improves immediately for categories where duty sensitivity is high. That can change line adoption decisions for basics and replenishment programs.
But the bigger strategic lesson is this: tariffs are being used as a geopolitical instrument, not just a trade policy tool. When tariff levels swing based on energy alignment and foreign policy, you cannot build a sourcing strategy on “static duty math.”
Implication: brands need scenario based costing (base, upside, downside) and faster reallocation capability than they did even 12 months ago.
2) Speed to market becomes the differentiator, not just FOB
Even if India becomes more competitive on duty, India is still typically a longer lead time supply chain versus nearshore options. In apparel, “cost per unit” is only half the equation. The other half is inventory risk (markdowns, missed trends, late deliveries, demand variability).
Implication: the winners will run a blended model:
India: scale, depth, large material ecosystems, competitive conversion for certain categories.
Nearshore (Central America): speed, smaller MOQs for chase, lower in transit inventory exposure, and rapid replenishment.
3) This increases the value of diversification
The industry has already learned the hard way that single country dependence is fragile. Now, the “fragility” isn’t just operational (ports, pandemics, capacity). It’s policy driven: tariffs can shift quickly when geopolitics shift.
Implication: sourcing leaders should treat diversification like an insurance portfolio: pay a little for resilience, save a lot when policy or disruption hits.
Why Central America still matters even if India tariffs fall
Nearshoring was never only about avoiding tariffs. It is about control:
Shorter calendars: enabling smaller, more frequent reads of demand.
Working capital efficiency: less inventory stuck on the water.
Risk containment: when macro conditions change, you can pivot faster.
Operational visibility: easier factory access, faster issue resolution, tighter QA loops.
For brands trying to protect margin and protect top line, the most strategic posture is not “India vs nearshore.” It is India plus nearshore, built around product intent:
High volume, stable demand items can live longer cycle.
Trend driven or refill heavy items belong close to market.
What brands should do this week
Re run landed cost on India programs using an 18 percent scenario, but keep a contingency scenario above it.
Audit exposure: identify which styles are most sensitive to tariff volatility (high duty share of landed cost).
Protect agility: keep a nearshore lane available for chase and risk mitigation.
Avoid over correcting: details of the deal are still being finalized, and political trade dynamics can reverse quickly.
The MTAR perspective
At MTAR, the goal is to help brands build a supply chain that wins in the real world, where trade policy, geopolitics, and consumer demand all move at the same time. A tariff reset with India can be good news for global capacity and pricing pressure, but it does not replace the need for a nearshore strategy designed for speed, flexibility, and resilience.
If you want, share a couple of your highest volume styles and your “chase” styles, and I’ll outline a practical split by product type that balances cost, calendar, and risk under this new tariff landscape.