Behind the Slump in Indian Textile Exports to the US: Tariff Uncertainty Accelerates Asian Supply Chain Reshuffling

In the first half of 2026, the US textile and apparel import market showed a clear divergence: India's exports to the US fell from $5.35 billion to $4.10 billion year-on-year, a sharp decline of 23.3%, equivalent to losing $1.25 billion in orders; meanwhile, ASEAN exports to the US grew by 4.5% against the trend. This contrast clearly reveals that tariff policy uncertainty is reshaping the competitive landscape of the Asian textile supply chain.

Signals Behind the Data

India's share in the US textile and apparel import market dropped from 10.4% to 8.6%, a contraction of 1.8 percentage points, while the overall US import decline was only about one-third of India's. This indicates that India is not merely suffering from a shrinking market but is facing proactive order reductions by buyers. Industry data shows that textile and apparel orders are typically locked in 6 to 9 months in advance, with procurement decisions for spring/summer 2026 shipments mostly made between late 2025 and early 2026. At that time, Indian suppliers were exposed to repeated tariff policy adjustments, prompting US brands and buyers to reduce allocations from India to avoid cost uncertainty.

It is noteworthy that ASEAN's export growth is not accidental. With relatively stable tariff environments and mature industrial chain support, Southeast Asian countries are emerging as more reliable alternatives for US buyers. This shift is not a one-off event but exhibits strong supply chain inertia: once buyers complete supplier switching, production scheduling, and logistics planning, orders are unlikely to return quickly even if tariff conditions improve. For India, this means that lost market share may continue to weigh for several quarters.

Industrial Impact and Competitive Logic

The implications for global textile trade are multi-dimensional. First, policy stability has become as critical as cost in procurement decisions. US buyers are incorporating tariff risk and policy predictability into supplier evaluations, and origins that rely solely on low-cost competition are vulnerable to order losses during policy fluctuations. Second, the inertia of order shifts implies that market share changes have a lagging effect; if companies do not diversify their markets in advance, recovery periods after external shocks may be far longer than expected.

For Southeast Asian origins, short-term order growth is certainly beneficial, but they must also watch for price competition risks after capacity expansion. For India's textile industry, regaining US market share requires not only an improved tariff environment but also addressing gaps in supply chain efficiency, delivery reliability, and compliance capabilities. The adjustment in global textile trade patterns is extending from order levels to capacity investment and industrial chain layout, and future regional competition will increasingly depend on comprehensive resilience.

Practical Recommendations

For Buyers - Adopt a multi-origin sourcing strategy, spreading orders across 2-3 countries with different policy risk levels to reduce the impact of single-market volatility. - Include tariff adjustment clauses in contracts to clearly define cost-sharing mechanisms and avoid profit losses due to sudden policy changes. - Regularly assess the policy environment of supplier countries and incorporate tariff stability into annual supplier audits.

For Trading Companies - Deepen presence in stable markets like ASEAN, but be mindful of homogeneous competition as local capacity saturates; differentiate through product innovation. - Enhance supply chain flexibility through modular production and quick-response mechanisms to shorten lead times and strengthen customer loyalty. - Proactively engage with clients during tariff fluctuations to negotiate long-term agreements, leveraging stable expectations for order priority.