US–India tariffs impact on apparel and jewelry industries

US–India tariffs are reshaping fashion supply chains, pushing brands to rethink sourcing, compliance, and pricing. These cross-border duties ripple from factory floors to storefronts, redefining margins and negotiating power.

In apparel and jewelry, costs tied to cotton, finished garments, gemstones, and metalwork can swing quickly. Brands recalibrate assortments, lead times, and vendor mixes, while retailers weigh promotions against slimmer profits.

For you, that can mean shifting price tags, limited drops, or longer shipping windows. It may also accelerate interest in sustainable lines, repairs, and resale. Ready to see how these trade measures show up in your cart?

Overview of US–India tariff structures

US–India tariffs now sit at the center of bilateral trade strategy, with new punitive duties from late August 2025 reshaping costs for textiles, apparel, diamonds, and select jewelry inputs.

These measures build on an already high U.S. MFN structure for clothing and a still-unresolved lapse of India’s GSP benefits, which keeps many Indian exports outside preferential access.

On India’s side, policy has moved in the opposite direction for key jewelry inputs: New Delhi slashed gold and silver import taxes in July 2024, aiming to boost domestic value addition and curb smuggling, a shift that continued to influence FY2025 trade flows.

Together, these changes create a push-pull dynamic for brands sourcing in India’s fashion and gems ecosystem.

Current Tariff Rates

Before the latest action, U.S. apparel imports from India already faced steep MFN lines under HTS Chapters 61 and 62, with effective averages in the mid-20s; the new 50% punitive layer on many Indian goods is what’s freezing orders and forcing renegotiations.

For jewelry, base U.S. duties vary by HS code, while India’s sharp cut to bullion duties lowers upstream costs for manufacturers even as U.S. end-market surcharges squeeze finished exports.

Early read-outs show the pressure in the data: multiple outlets report a sizeable drop in India’s shipments to the U.S. through mid-2025, with cut-and-polished diamond exports projected to fall 17–20% in FY26 amid higher U.S. tariff burdens.

Apparel exporters flag stalled bookings and requests to absorb part of the duty shock.

Types of Tariffs

In this corridor, ad valorem tariffs dominate for apparel and jewelry, meaning duties scale with the invoice value; that is why even modest price inflation can magnify landed costs after a surcharge.

Specific duties appear less often in these categories but can apply to some items, and compound structures blend both approaches in niche cases. The practical takeaway is that valuation, classification, and origin documentation directly shape the duty bill.

Because the 2025 measures are layered on top of existing HTS rates, importers must model base MFN duty plus any additional “special” tariff to estimate true margin impact.

Accurate HTS coding and country-of-origin rules therefore become critical risk controls for both brands and vendors.

Impact of Trade Agreements

Talks around restoring or updating preferences remain pivotal. The U.S. Generalized System of Preferences, which once granted duty-free access to many Indian goods, is still expired; without reauthorization, apparel and jewelry face standard MFN rates plus any new surcharges.

Parallel policy moves in India, such as GST 2.0 tweaks that lower the cost of lower-priced clothing domestically, can improve competitiveness but won’t neutralize U.S. border taxes by themselves.

Diplomatic engagement has resumed around the broader tariff standoff, yet sector-specific relief is uncertain.

Until a negotiated path emerges, companies should diversify HS codes and supplier mixes, reassess transfer pricing, and explore near-shoring or third-country processing to mitigate exposure to US–India tariffs.

Effects of tariffs on apparel prices

US–India tariffs are amplifying price pressures across the fashion pipeline. The U.S. move in late August 2025 to lift duties on many Indian goods to as high as 50% lands on top of already steep MFN apparel rates, pushing landed costs sharply higher for garments and accessories.

Early trade data show Indian exports to the U.S. falling notably since May, underscoring how quickly price and volume can react when duties spike.

Retail prices don’t rise one-for-one with tariffs, but pass-through is meaningful.

Industry analysis suggests each dollar of duty can ultimately add roughly $1.50–$2.00 to shelf prices once wholesale markups and retail margins compound costs, especially in categories like cotton basics subject to high ad valorem lines.

That dynamic helps explain why promotions are thinning and seasonal assortments are being resized for margin protection.

Jewelry inputs tell a more nuanced story. India cut bullion duties in 2024, lowering upstream costs for gold and silver work, yet U.S. surcharges on finished jewelry still squeeze final pricing, limiting how much of the savings reaches consumers.

In parallel, polished diamond exporters face weaker U.S. demand and tighter pricing power, which can feed into higher ticket prices for gemstone pieces.

How Tariffs Increase Costs

When tariffs are imposed, manufacturers face higher costs. They may respond by raising their prices to maintain profit margins. This can make buying clothing more expensive for consumers.

• Increased Production Costs: Tariffs on raw materials or components can inflate production expenses.
• Higher Retail Prices: Retailers often pass on these costs to consumers, leading to higher prices in stores.
• Market Variability: Fluctuating tariffs can create uncertainty, further driving costs up.

Beyond immediate price hikes, the long-term impacts on brands’ pricing strategies can be profound. Many brands might choose to absorb some costs to remain competitive, while others may not have that luxury.

Consumer Behavior Changes

Shoppers adapt quickly when prices move. U.S. consumers trade down within brands, shift to value retailers, and delay discretionary purchases like embellished dresses or gemstone jewelry when US–India tariffs push tags higher.

As promotions narrow, some buyers pivot to production from countries not hit by the latest surcharges, reinforcing origin-based substitution patterns already visible in monthly import mixes.

Demand elasticity varies by category. Essentials with strong private-label competition see faster switching, while branded athleisure and fine jewelry rely on storytelling and financing to soften sticker shock.

In jewelry, weaker diamond demand tied to higher price points compounds the export slump from India, creating a feedback loop that restrains U.S. retail sell-through. 

Price sensitivity also reshapes values. Some consumers lean into durability, repairs, and resale to offset higher new-goods prices, a trend retailers nurture with trade-in credits and warranty services.

That behavior can mute immediate price pass-through yet prolongs the demand drag for full-price seasonal fashion.

Industry Adjustments

Brands are redrawing supply maps to contain exposure to US–India tariffs.

Indian exporters are actively diversifying toward the EU and UK, while exploring capacity in African hubs where duty structures are lighter; at the same time, U.S. buyers rebalance toward origins outside the tariff scope, even if it means longer lead times or new compliance burdens.

Cost engineering is accelerating. Companies are reclassifying styles under accurate but more favorable HTS lines, redesigning garments to reduce dutiable components, and shifting to fabrics that keep values below tariff-sensitive thresholds.

For jewelry, lower Indian bullion duties ease some input pressure, but finished-good surcharges in the U.S. still require mix changes, smaller carat weights, or alternative stones to hit target price points.

The policy horizon remains fluid. Industry groups in India argue the 50% U.S. tariff is unlikely to endure and are lobbying for relief; until then, firms are modeling multiple duty scenarios, building clause-based pricing into contracts, and monitoring monthly import rates, which recently hit multi-decade highs for apparel.

Those who stay agile on sourcing, classification, and pricing stand the best chance of protecting margins as the tariff cycle plays out.

Impact on the jewelry market

The impact on the jewelry market due to tariffs can be profound, affecting all aspects of production and sales. As tariffs change, so does the cost structure for businesses and ultimately the consumer.

With rising tariffs on imported materials, manufacturers of jewelry often face higher production costs. This can lead to increased retail prices as companies struggle to maintain their profit margins.

• Rising Material Costs: Precious metals and gemstones may see price hikes due to increased tariffs.
• Product Pricing Adjustments: Retailers often must raise prices to cover the new costs passed down from manufacturers.
• Impact on craftsmanship: Higher costs could lead jewelry makers to opt for cheaper materials, affecting the overall quality.

The response to these challenges varies among brands. Some may choose to absorb costs to remain competitive, while others may be forced to cut back on quality or seek alternatives in different markets.

As prices increase, consumers might reevaluate their spending habits regarding jewelry. High tariffs can shift demand away from luxury items towards more affordable options or alternatives.

This shift can lead to a slower growth rate for high-end jewelry brands as consumers prioritizing budget-friendly pieces may impact their bottom line. Jewelry retailers need to adapt by diversifying their product lines to meet changing customer preferences.

Alongside these shifts, the impact on the jewelry market extends to international trade. Businesses involved in import and export must remain aware of how tariffs influence global market dynamics.

Even amid challenges, there are opportunities to explore. Brands might find niches in handcrafted items or ethically sourced materials that resonate with consumers increasingly concerned about sustainability.

The demand for custom jewelry could rise as consumers seek unique pieces that reflect personal style rather than mass-produced items. By focusing on quality and customer care, jewelry businesses can navigate through these turbulent times.

In summary, businesses that proactively anticipate changes in the jewelry market due to tariffs can position themselves to succeed despite the challenges these regulations present.

Trade opportunities and challenges

The latest US–India tariffs reset the risk–reward calculus for fashion and jewelry. Higher U.S. border taxes on Indian textiles and jewelry raise landed costs, yet they also catalyze fresh sourcing models, new market entries, and deeper brand–supplier partnerships.

Indian manufacturers are already pivoting, discounting to keep U.S. orders alive while scouting growth in the EU and UK, and testing capacity in African hubs where duties are lighter.

These moves reveal a dual reality: short-term margin strain alongside medium-term openings for firms that diversify and redesign supply chains with precision.

Emerging Markets

Tariff shocks are pushing companies to look beyond the traditional U.S. lane and treat India not only as a factory base but as a demand center and a platform for third-country expansion.

Exporters serving U.S. names are increasing shipments to Europe and the UK, where access conditions are currently more favorable, while exploring satellite production in countries like Kenya and Ethiopia to achieve tariff arbitrage and maintain price points.

For jewelry, India’s 2024 duty cuts on gold and silver reduced input costs and curbed unofficial inflows, improving the economics of local value-addition even as U.S. surcharges bite at the border.

Together, these shifts create room to seed premium lines for domestic Indian consumers and to funnel competitively priced goods to non-U.S. destinations.

Challenges in Compliance

The compliance burden has risen sharply. Importers now face stacked duty calculations: base MFN rates under HTS Chapters 61–62 plus the additional 2025 surcharges, which are largely ad valorem and therefore scale with invoice value.

Small errors in classification or valuation can snowball into significant duty exposure, chargebacks, and shipment holds.

The lapse of the U.S. Generalized System of Preferences means most Indian goods no longer enjoy preference flags, eliminating a long-used relief valve until Congress acts; in the meantime, firms must model “general” rates and maintain documentary readiness in case of retroactive refunds if GSP is renewed.

Robust HTS reviews, origin tracing, and audit trails are now core to margin protection under the US–India tariffs regime.

Adapting to Market Conditions

Resilience hinges on speed and mix. Leading exporters and U.S. buyers are rebalancing purchase orders, absorbing part of the tariff shock where necessary, and re-engineering products to fit more favorable classifications or reduce dutiable components.

Some apparel makers are shifting volumes toward Europe and the UK and building capacity in Africa to maintain lead times and pricing, while U.S. retailers recalibrate assortments and promotions to preserve unit economics.

In jewelry, lower Indian bullion duties help upstream, but finished goods still face U.S. surcharges, pushing brands to adjust carat weights, stone choices, and design complexity to hit target price bands.

Companies that scenario-plan around multiple duty paths, maintain flexible vendor mixes, and monitor monthly import trends stand the best chance of turning turbulence into competitive advantage.

Future trends in US–India trade relations

The next year will likely be defined by whether Washington moderates the latest US–India tariffs and whether New Delhi can offset U.S. exposure through market diversification.

India’s chief economic adviser has already hinted the U.S. could ease some duties, even as exports to America sagged more than 20% from May to August 2025 following tariff hikes to as high as 50% on key categories like garments and gems.

Any partial rollback would immediately reshape sourcing plans and price architecture across apparel and jewelry.

In parallel, diplomacy is warming just enough to keep a de-escalation path open. Senior ministers met on the sidelines of the U.N. General Assembly this week, signaling intent to re-engage after the tariff shock; if that track holds, industry should prepare for phased relief rather than a single sweeping deal.

A broader reset could also revive long-stalled conversations around preferences such as the Generalized System of Preferences, whose lapse continues to deny India duty-free access on many lines.

On fundamentals, India will push dual strategies: lower input frictions at home and diversify buyers abroad.

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FAQ – Questions about US–India Trade Relations

How do tariffs impact apparel pricing?

Tariffs can increase production costs, which are often passed on to consumers, resulting in higher prices for apparel.

What opportunities are there in the digital trade space?

The growing e-commerce sector allows businesses to reach consumers in both the US and India, enabling online sales and partnerships.

Why is sustainability important in trade?

Sustainability is crucial as it helps meet global environmental standards and appeals to consumers who prioritize eco-friendly products.

What challenges do businesses face due to trade regulations?

Businesses must navigate changing tariffs and compliance requirements, which can complicate import and export processes.