India set for 3rd-biggest tariff shock in global apparel and footwear trade

India is estimated to face the third-highest incremental impact of tariff increases on US imports in terms of value from January (tariff levels before President Donald Trump’s big tariff increases) to August 27, 2025 on apparel and footwear, behind only China and Vietnam, according to the latest report released by McKinsey on the “State of Fashion 2026”.

 

While the total incremental increase in duties on global apparel and footwear exports to the US, due to Trump tariff hike, is estimated to be $27 billion, assuming there is no change in export volumes in each country in 2025, the impact on India will be $2.9 billion.

 

Simply put, this means that the punitive duty of 50 per cent levied on India because it bought oil from Russia has upset the apple cart. While India accounts for only 5 per cent of total exports (in 2024) in apparel and footwear to the US, it will face, based on estimates, a much higher and disproportionate 11 per cent of the total incremental tariff increase.

 

China, of course, is on top of the pecking order, with an incremental duty increase impact of $9 billion. However, while China accounts for 30 per cent of the total exports to the US, its estimated share of the incremental tariff increase for 2025 is 34 per cent.

 

In the case of Vietnam, the incremental duty increase would be $5 billion. So, while Vietnam has a 25 per cent share in exports to the US, its share in the burden of incremental tariffs is much lower at 19 per cent.

 

However, the other exporting countries, including Bangladesh, Indonesia, Cambodia and Pakistan, will have a much lower incremental impact than India.

 

The world’s key fashion sourcing hubs — which include China, Vietnam, India, Bangladesh, and Indonesia — collectively account for 63 per cent of total apparel and footwear exports to the US. They will face a disproportionate 75 per cent of the incremental impact of tariffs, the report concludes.

 

The McKinsey report says the move has already had repercussions — apparel prices have risen by 1.3 per cent in the US, and 55 per cent of US apparel and footwear executives expect further price hikes in 2026. And, brands like Nike, Hermes, and Ralph Lauren have been explicit on price rises. Not only that, Indian apparel exporter Gokaldas Exports — which supplies to Walmart, Gap, and J C Penney — is planning to expand its production in Kenya and Ethiopia to counter tariffs. 

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