> US buyers are seeking 15-20% discount for several products for which orders had been placed before Trump upset calculations by exploding the tariff bomb.
> While large retailers, with long-term contracts with vendors to cater to global operations haven’t altered their sourcing plans, Indian exporters are waking up to orders being put on hold.
> There is pressure from US buyers to absorb or share the additional cost they will have to incur for the current orders and those in shipment. There is confusion among buyers and exporters on the ground, said Rahul Mehta, chief mentor at Clothing Manufacturers Association of India (CMAI).
> The real worry is demand destruction, especially in sectors like textiles or gems and jewellery where discretionary purchase is involved as Americans postpone purchases.
> Industry fears a slowdown in fresh orders. Higher tariffs may also pose liquidity pressure on US buyers, especially the smaller ones, as they will have to suddenly shell out higher customs duty, said an exporter.
> **We are also hearing that some buyers and Indian exporters have struck deals to split the additional tariff burden**,” said Kashika Malhotra, head of business development at Brandman Retail, which is a distributor for US brands like Jansport and Timberland in India.
> Some of our buyers are in a huddle and will begin negotiations next week. **But indications are that they will suggest a three-way split between the seller, buyer and consumer**. In our business, margins are so low that it’s tough to offer any discount,” said a leading garment exporter.
> On the ground, factories are juggling schedules – some shipments to the US are delayed and one can expect companies to hold off on big procurement or expansion decisions until there’s more certainty.
> “Overall, global retailers are concerned and making tactical adjustments, but India remains very much on their sourcing map. The consensus is to work with Indian partners on solutions for now ,” Malhotra said.
tinuuuu on
I think the garment industry is one sector where we might see production shifts back to the USA. Trends have accelerated, and shorter supply chains mean that there are faster turnaround times from design to retail. This is particularly relevant because clothing lacks sufficient value per volume to justify frequent long-distance air shipping. Automating clothing manufacturing used to be challenging, because predicting how fabrics move and are handled by machines is far more complex than working with rigid materials like auto body parts. However, recent advances in automation now allow certain garment types to be produced entirely autonomously. All of this combined with tariffs on nearly every major producer of inexpensive clothing will drive a shift.
autumn-morning-2085 on
This makes sense for the very short-term, hoping that Trump rolls it back a few weeks in. Don’t see such deals lasting beyond that in low margin industries.
3 Comments
> Calculators are out.
> US buyers are seeking 15-20% discount for several products for which orders had been placed before Trump upset calculations by exploding the tariff bomb.
> While large retailers, with long-term contracts with vendors to cater to global operations haven’t altered their sourcing plans, Indian exporters are waking up to orders being put on hold.
> There is pressure from US buyers to absorb or share the additional cost they will have to incur for the current orders and those in shipment. There is confusion among buyers and exporters on the ground, said Rahul Mehta, chief mentor at Clothing Manufacturers Association of India (CMAI).
> The real worry is demand destruction, especially in sectors like textiles or gems and jewellery where discretionary purchase is involved as Americans postpone purchases.
> Industry fears a slowdown in fresh orders. Higher tariffs may also pose liquidity pressure on US buyers, especially the smaller ones, as they will have to suddenly shell out higher customs duty, said an exporter.
> **We are also hearing that some buyers and Indian exporters have struck deals to split the additional tariff burden**,” said Kashika Malhotra, head of business development at Brandman Retail, which is a distributor for US brands like Jansport and Timberland in India.
> Some of our buyers are in a huddle and will begin negotiations next week. **But indications are that they will suggest a three-way split between the seller, buyer and consumer**. In our business, margins are so low that it’s tough to offer any discount,” said a leading garment exporter.
> On the ground, factories are juggling schedules – some shipments to the US are delayed and one can expect companies to hold off on big procurement or expansion decisions until there’s more certainty.
> “Overall, global retailers are concerned and making tactical adjustments, but India remains very much on their sourcing map. The consensus is to work with Indian partners on solutions for now ,” Malhotra said.
I think the garment industry is one sector where we might see production shifts back to the USA. Trends have accelerated, and shorter supply chains mean that there are faster turnaround times from design to retail. This is particularly relevant because clothing lacks sufficient value per volume to justify frequent long-distance air shipping. Automating clothing manufacturing used to be challenging, because predicting how fabrics move and are handled by machines is far more complex than working with rigid materials like auto body parts. However, recent advances in automation now allow certain garment types to be produced entirely autonomously. All of this combined with tariffs on nearly every major producer of inexpensive clothing will drive a shift.
This makes sense for the very short-term, hoping that Trump rolls it back a few weeks in. Don’t see such deals lasting beyond that in low margin industries.