Trade negotiations between the United States and India have been fraught with tension bordering on passive aggression over the past year, with both sides repeating publicly that they’re vying for a deal, and one—the U.S.—doing seemingly everything possible to prevent one from materializing.
After imposing and reneging on sky-high 50 percent duties on India in 2025, President Donald Trump and Prime Minister Narendra Modi have attempted to find consensus, deploying trade officials to hash out the details of an interim trade agreement several times in recent months.
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But concurrent to that process, the country, along with 59 other economies, has been hit with a new 10 percent tariff as the result of a recent U.S. Trade Representative investigation into import bans of products made with forced labor. It is also among 16 economies being targeted by the USTR in a separate Section 301 probe into structural excess capacity, which stands to result in double-digit duties, too.
The kicker, which loomed large in the minds of India-based suppliers at the Sourcing at Magic trade show in Las Vegas this week, was the possibility of being hit with a whopping 100 percent duties as the result of new legislation.
The Lindsey O. Graham Sanctioning Russia Act of 2026, so named for its greatest champion, passed in the Senate earlier this month in the wake of the South Carolina lawmaker’s death. A companion to the bill, which aims to punish countries like China and India for their continued purchases of Russian oil and energy products—deals American lawmakers believe are helping to finance Russia’s war in Ukraine—was introduced earlier this week.
If a 100 percent tariff is levied on Indian products like apparel, “then the [U.S.] market is closed for India,” Kunal Modi, manager of Mumbai-based men’s wear supplier Banbury Exports, told Sourcing Journal.
Modi said the U.S. represents a relatively new market for the men’s wear manufacturer, which, over the past four years, has built relationships with off-price retailers like Burlington, T.J. Maxx and Ross. But it hasn’t been easy to get a foothold—or keep it.
“Presently, due to the tariffs, there has been uneasiness. Many things have been halted, so it’s not as smooth as it used to be before in the previous tariff regime,” Varun Modi, the group’s vice president, added.
That was evident in speaking with Indian exhibitors across the trade show. “We don’t see much footfall as compared to the previous years. Participation as well,” he added. “There used to be close to 85 to 90 exhibitors from India. This year, maybe 50-something.”
At least some of that contraction stemmed from the belief that the U.S., as an export market, has become a lost cause.
Those that did stop by Banbury’s booth were mostly “existing buyers who are coming and just taking a look and saying, ‘Let’s see how it goes,’” with regard to the impending duties, Varun Modi said. “They are also in two minds whether the tariff will be applicable or not.”
According to Kunal Modi, last year’s “reciprocal” tariffs were bad enough to stunt business and introduce friction into relationships with brands.
“In the last year, we had a lot of orders in hand, which all got canceled because of the tariffs. The buyers wouldn’t say that it’s canceled—they’d say ‘Let’s wait for what happens next.’”
“Whatever happened took a lot of time to clear up,” he said, referring to the roller coaster of shifting duty rates that ensued. “One full year was wasted because of that. A lot of business was lost because of that.”
Harkening back to behaviors panned during the Covid-19 pandemic, brands and retailers stopped orders mid-production. Finished goods were sold by Indian suppliers at hefty discounts. “Whatever you saw probably in the last year [at retail] was all lost orders for the Indian suppliers,” Kunal Modi said.
Asked about plans to lean into other markets, Varun Modi said succinctly that Europe and the U.K. will be Banbury’s focus (especially now that the latter has signed a free-trade agreement with India) along with the Middle East and the domestic consumer base in India.
“We were hoping that the U.S. would become big, but we are still trying to make it, to break into the market,” he said.
In Kunal Modi’s estimation, “there’s too much ambiguity” now for that to happen.
“People are not sure about the future. What will be the scene? What will be the tariffs? What will be the government outlook towards India? There are too many questions, so people are not moving ahead like they used to,” he said.
In his view, the U.S. administration’s waffling is to blame. “The government is not defined about their own targets, or whatever they have in mind—they are still having ambiguity about their own next step.”
“Businesses can’t run that way,” Varun Modi added.
Rupesh Badiani, partner at Mumbai-based women’s wear manufacturer Fashion Fantasy, agreed that tariffs have shrouded businesses in uncertainty. “There’s no hiding from that fact,” he said.
The U.S. market accounts for about 30 percent of exports for the supplier, which deals in women’s premium apparel like dresses, evening wear and blouses, servicing brands like Farm Rio and Lovestitch. Other exports are targeted toward Europe, and some products are made for the Indian market.
Badiani said the tariffs have hurt both his business and his buyers.
“We have some clients who have had to have layoffs due to the higher costs,” he said. “They have been reducing their own overheads to cover the cost of tariffs and also reducing their sourcing and consolidating their suppliers. Instead of having 20 suppliers, they say ‘We’d rather work with 10 or 12.’”
Brands are also limiting their ranges, tightening their collections, “and just making sure that they buy what they know for sure is going to sell, rather than add-ons,” he said.
He’s also been the victim of canceled orders.
“There was a little period where we started getting a lot of feedback on new developments and products, but it didn’t go too far. Suddenly things changed, and again they said, ‘Okay, hold, don’t proceed,’” he said.
It’s changed the way the company does business, forcing Fashion Fantasy to provide buyers with longer lead times. They tell clients their goods must be made to order. “As soon as you order, we will purchase the fabric. We won’t start our expenses until we get a written confirmation,” he said. “Everyone’s put their hand into the fire before.”
Negotiations between suppliers and brands used to be more fluid, with orders placed via handshake deals. Now, even when it comes to old clients, even an enthusiastic promise can’t replace a signed contract. “Not anymore,” he said. “And it’s not about trust—it’s about circumstances.”
Like many suppliers, Fashion Fantasy has been approached by brands looking to share the tariff burden. Badiani said most are looking for suppliers to take on 15-30 percent of the added cost, depending on who is paying for freight.
Many of India’s suppliers have now set their sights on Europe and the U.K., with the siren’s song of the Comprehensive Economic and Trade Agreement calling them in.
“Their economies are not really that great, so I don’t know how it’s going to work,” Badiani said, but nonetheless, “everyone who’s participating in this fair from India is going to be going to every single fair in Europe and the U.K. to try and get back the business they’re losing here.”
There are still many factors that make America an attractive investment, though it’s less shiny today than it has been in years past. “The magnetic pull of the U.S. is that it’s still a big market, and it’s actually like one country with a lot of small countries within it,” he added. “If you have four stores in California,” he added by way of example, “you’ve still got a good business going.”
Badiani fears that, even as it faces the same astronomical tariff rate with the legislation making its way through Congress, China will end up on top again. Where India had captured some market share in the years following the pandemic due to its unique capabilities, growing capacity and flexibility, China is no longer just a sourcing locale for brands looking for cheap goods at high volumes. They can do it all, he believes, and better than most everyone else.
“China has changed. They’ve taken over. The whole world is two decades behind,” he said.
He pointed to a recent anecdote. “One of our clients has reduced India buying, so I said, ‘So you’re buying from China?’ They said ‘Yeah, we’re buying from China because they’re quick. They can give us our goods in 40-45 days, made to order.’ India can’t do that. India is far behind because we don’t have the infrastructure for fast fashion,” he said.
Reconstituting the bilateral bond between the two countries, now frayed by more than a year of threats and punitive measures, will not happen overnight. “It will take a while for the policies to change, even if the Democrats come in—or another Republican who’s a bit more enterprising, who will say, ‘Let’s open up the market,’” he said. “It will still take time; you’re looking at five years from now for things to go back to the way they were.”
Asked whether he believes the India-U.S. trade relationship can find its footing again, prompting growth within India’s burgeoning apparel sector, Badiani said, “Maybe after 2028, when he goes.” Referring to Trump, he added, “I think somebody’s got to do what he does to everybody else. Tell him ‘You’re fired.’”
