US orders for Indian goods dry up before Trump's 'Liberation Day' tariff

American buyers have put fresh orders from India on hold and delayed existing ones as they await clarity on the implementation of reciprocal tariffs by the Donald Trump administration. 

The cautious wait-and-watch approach adopted by American importers is significant as the US remains India’s largest export market, accounting for nearly a fifth of the country’s $76.4 billion in shipments during the April-February period of FY25.

Adding to exporters’ woes, Western European buyers are  also scaling back orders, citing economic uncertainty fuelled by tensions between the European Union (EU) and the US, alongside additional American tariffs on steel, aluminium, and automobiles. 

Ajay Sahai, director-general and chief executive officer of the Federation of Indian Export Organisations (FIEO), said US buyers refrained from placing new orders as they waited for clarity on how the reciprocal tariffs would be implemented. The US administration provided little clarity on how the reciprocal tariffs would be calculated before the formal announcement, making it difficult for countries, including India, and businesses to devise a strategy to navigate the impact. 

“While past orders have been in larger quantities, new orders from the US are on hold. They are concerned because there is no clarity on what will be the quantum of tariff, whether the additional tariff cost will be passed on to the customer or absorbed by the exporter or importer. All these details need to be looked into, and a call will be taken accordingly,” said Sahai. “Buyers have requested exporters to limit shipment volumes for previously placed orders,” he pointed out.  

Aside from air cargo, shipments transported by sea arriving after April 2 are likely to be subject to the new tariffs, compounding the uncertainty. 

While some buyers are urging exporters to pause shipments, industry leaders say there is no immediate risk of large-scale order cancellations. Chandrima Chatterjee, secretary general of the Confederation of Indian Textile Industry (CITI), said that while some customers have asked to keep shipments on hold, there is no indication of outright downsizing. 

The key issue is lack of clarity on reciprocal tariffs, Chatterjee said, adding that some orders are in limbo as buyers wait for further details before finalising deals. 

For the pharmaceutical sector, concerns remain muted. Raja Bhanu, director-general of Pharmexcil, said existing health care-related orders are still being executed, though future shipments will depend on how the tariff policy unfolds. “As of now, there is not any drastic change since these are health care requirements. Further plans will depend on the reciprocal tariff announcement,” he said.