Walmart, Amazon stop orders from India after Trump's 50% tariff
What's the story
Leading US retailers such as Walmart, Target, Amazon, and Gap have suspended orders from India. This comes after US President Donald Trump imposed a 50% tariff on Indian goods. Exporters have been asked to stop shipments of apparel and textiles until further notice. The new tariff regime is expected to raise costs by 30-35%, potentially leading to a 40-50% drop in US-bound orders.
Cost impact
Exporters to bear financial impact
The US buyers are unwilling to absorb the increased cost burden and are pushing Indian exporters to bear the financial impact themselves. Industry estimates suggest that this could lead to losses amounting to $4-5 billion. Leading exporters such as Welspun Living, Gokaldas Exports, Indo Count, and Trident derive 40-70% of their sales from the US market.
Market competition
Competitors like Bangladesh, Vietnam will gain
The textile and apparel sector is now worried about losing a major chunk of its business to rival countries like Bangladesh and Vietnam. These nations have lower tariffs of around 20%. The US is India's largest market for textile and apparel exports, accounting for 28% of total outbound shipments worth $36.61 billion in the fiscal year ending March 2025.
Tariff justification
Trump's punitive tariffs on India
The punitive tariff measures were triggered by India's continued purchase of oil from Russia. In an executive order signed on Wednesday, Trump wrote, "I determine that it is necessary and appropriate to impose an additional ad valorem duty on imports of articles of India, which is directly or indirectly importing Russian Federation oil." The first 25% tariff came into effect on Thursday, while another 25% will be imposed on August 28.
Scenario
India's response to tariffs
India has called the US tariffs "unfair, unjustified, and unreasonable." In a statement, the Ministry of External Affairs said that it is "extremely unfortunate" that the US chose to impose additional tariffs on India for measures that many other countries are also undertaking in their own national interest. "India will take all actions necessary to protect its national interests," the ministry added.