US India Trade Deal | USA Cuts Tariffs on Indian Imports from Up to 50% to Around 18% — Big Relief for Apparel Sector

The USA has announced a major tariff reduction on Indian imports, bringing duties down from levels as high as 50% to around 18% under the new 2026 trade reset. This is a significant development for the Indian apparel and textile industry, and an important sourcing update for USA clothing brands. For startups and emerging fashion labels looking to manufacture women’s wear and kidswear in India, this change can improve landed costs, restore stability, and open new opportunities for long-term production partnerships.

Image Source : New York Times

Today, with a trade policy reset between the U.S. and India in early 2026, there’s renewed clarity and opportunity for brands seeking ethical, scalable, and high-quality garment sourcing. This blog unpacks the latest policy shifts and what they mean for your business.

For emerging and startup clothing brands in the United States, India isn’t just another sourcing destination but it’s one of the most dynamic manufacturing ecosystems in the world. A combination of deep supply-chain capabilities, compliance expertise, and competitive pricing makes India a preferred partner for women’s and kidswear production. But until recently, U.S. tariffs on Indian imports had clouded the export landscape - especially for apparel.

1. The 2025 Tariff Shock and Its Impact

In August 2025, the United States government significantly raised tariffs on Indian imports — including apparel and textiles — as part of broader trade actions related to global market imbalances. In some cases, total duties on Indian goods rose to as high as 50%, creating severe cost pressure for Indian exporters and the U.S. brands that rely on them.

This sudden hike meant many small and medium clothing manufacturers in India temporarily halted production as U.S. brands struggled to absorb the tariff burden or sought alternative supply chains.

As a result:

• U.S. brand partners weighed shifting orders to countries with more favorable tariffs (e.g., Vietnam, Bangladesh).

• Indian apparel exports to the U.S. saw slower growth and margin pressure.

This was a pivotal moment for manufacturers and U.S. buyers alike — and it heightened the urgency for a bilateral trade solution.

2. 2026 Trade Agreement: Tariffs Reduced to ~18%

After months of negotiations, a new U.S.–India trade deal was finalized on February 03, 2026, with both sides agreeing to lower reciprocal tariffs on Indian goods to about 18%.

Here’s what happened:

• The United States agreed to cut tariffs on Indian imports — including apparel and textile products — to around 18% from previously punitive levels.

• India agreed to stop certain oil imports (including Russian crude), a key issue linked to the tariff dispute.

• The deal was framed as part of broader cooperation and market access improvements between the two countries.

For USA fashion startups, this tariff reduction represents a reset in export economics — making Indian manufacturing more competitive on landed cost than it had been at 50% tariffs.

3. What This Means for USA Brands Sourcing Custom Clothing from India

India has one of the world’s most complete ready-to-wear garment supply chains — from spinning to finished garment inspection — for categories such as women’s fashion, kidswear, denim, activewear, and sustainable collections. The tariff reset helps your business in several ways:

• Better Price Competitiveness

Reducing tariffs to ~18% improves landed costs into the U.S. market — particularly for products like dresses, tops, kidswear, and woven garments.

• Easier Forecasting

With tariffs stabilized, you can forecast pricing and margin models: critical for startups with tight cash flows and retail launches.

• Growth with Quality

Indian manufacturers like Billoomi Fashion offer full-service capabilities from pattern making, compliance, finishing, to global shipping, which helps emerging brands scale quickly.

• Sustainability & Compliance

India’s apparel clusters are increasingly compliant with global standards — ISO certifications, sustainability audit trails, and ethical labor practices — a major plus for USA brands focused on sustainability.

4. Tariff Change Timeline (Quick Reference)

Period	Tariff Regime on Indian Apparel Exports to U.S.	Impact on USA Brands
Pre-2024 / Baseline	~15–20% (standard MFN)	Competitive sourcing costs; predictable pricing.
Mid-2025 to Late-2025	Up to ~50% in tariff spikes	Increased landed cost; supply chain shifts; order diversion.
Feb 2026 Onwards	~18% under new trade deal	Improved cost predictability; renewed sourcing opportunities.

5. Why India Still Matters to USA Private Label Clothing Brands

While some U.S. brands explored relocating orders in countries like China and Bangladesh due to the 2025 tariff spike, India’s manufacturing advantages remain powerful:

• Full spectrum garment capabilities: Women’s fashion, kidswear, denim, organic cotton, technical knits.

• Compliance & social responsibility: Strong audit compliance, ethical labor practices, environment-friendly production.

• Scalability for startups: From MOQ flexibility to tech-enabled quality control, India is ideal for brands scaling from 5,000 units to 500,000+.

• Near-shoring alternatives: Despite tariff volatility, the quality–cost balance often beats regional competitors when structured appropriately.

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6. Final Takeaways for Emerging USA Clothing Brands

If you’re building a women’s or kidswear label in the USA and looking for a trusted custom manufacturer and exporter, here’s what matters:

• India’s tariff environment is now more favorable than it was in late 2025.

• Custom clothing manufacturers like Billoomi Fashion can help you navigate compliance, cost, and quality at scale.

• The new tariff levels (~18%) support long-term partnerships, not transactional sourcing.

With the latest tariff update, your dream to hire a custom apparel clothing manufacturer from India can be a strategic engine for your brand’s growth — delivering on quality, timing, and value.