(INDIA) Amazon and Walmart have paused or sharply cut new orders from Indian suppliers after President Trump’s new 25% tariff on all Indian-origin goods took effect on August 7, 2025. The move hits shipments immediately and forces both buyers and exporters to rethink supply chains.
Retailers say the added cost makes many categories unworkable in the short term. Suppliers report urgent calls to shift production to places with lower tariffs. Early exemptions apply only to goods already in transit before August 27 and entered in the United States before September 17.
What changed and when
- The United States imposed a 25% tariff on all Indian-origin products under Executive Order 14257, with limited exceptions listed in Annex II.
- Effective clock: Goods entering after 12:01 a.m. ET on August 27 face the extra duty. A savings clause shields qualifying shipments already on the water and cleared by September 17.
- The administration cites the trade gap with India and India’s continued purchase of Russian oil as reasons for the measure.
- Industry sources report: “Brands are having discussions with us to find alternatives and options if we have any additional capacities in regions with lower tariffs.”
How retailers and suppliers are responding
- Amazon and Walmart are reviewing contracts and rerouting sourcing to Southeast Asia, Latin America, and parts of Africa.
- Buying teams warn of supply gaps in:
- Apparel and textiles
- Home goods
- Jewelry
- Leather products
- Some specialty foods
- Indian vendors are:
- Racing to find new buyers
- Renegotiating prices
- Moving steps of production outside India to avoid the tariff
Official positions and signals
- President Trump frames the action as “reciprocal,” saying US interests must come first.
- US officials, including the State Department’s Principal Deputy Spokesperson Tommy Pigott and Secretary of State Marco Rubio, stress the partnership with India but stand firm on trade and energy concerns.
- Prime Minister Narendra Modi is set to attend the Shanghai Cooperation Organisation summit in China, where tariff tensions are likely to surface.
Practical steps for US importers
- Review classification: Check if your goods fall under Annex II exemptions in Executive Order 14257.
- Check shipping timelines: Goods loaded before August 27 and entered for consumption before September 17 may qualify for the savings clause.
- Calculate the tariff: Add 25% to the normal duty rate for covered items at entry.
- Consider alternative sourcing: Shift orders to countries not facing the new 25% charge.
- Watch for updates: Follow the US Trade Representative and US Customs and Border Protection for guidance.
What this means for different groups
- US retailers: Expect higher landed costs, tighter margins, and possible stockouts. Teams will push for cost reductions, smaller assortments, and faster onboarding of new suppliers. Amazon and Walmart will likely prioritize high-volume basics while trimming low-margin fashion lines vulnerable to tariffs.
- Indian exporters: Face immediate revenue pressure and canceled purchase orders (POs). Some may explore partial processing outside India to change country of origin—though rules are strict. Others will court Europe, the Middle East, and Japan to replace US demand.
- US consumers: Prices may rise in categories where India holds strong shares (cotton apparel, home textiles, certain jewelry). Discount seasons could have thinner promotions if retailers can’t offset the 25% charge.
- Workers: Factory staff in India may face reduced overtime or temporary layoffs. US port and warehouse workers could see shifts in cargo mix as orders pivot to non-Indian sources.
Compliance notes (plain language)
- “Reciprocal tariff” — the US applies a rate in response to another country’s policies; here that rate is 25% for Indian-origin goods.
- “Entered for consumption” — a customs term meaning the importer files entry and the goods join the US economy for sale or use.
- Annex II — lists goods exempt from the new tariff. Importers must confirm HTS classification against that list.
Important: Confirm shipments’ load dates and entry filings if you plan to use the savings clause. Documentation is critical.
A supplier’s on-the-ground story
A mid-size textile exporter in Tiruppur says three US fashion brands froze fall orders within hours of the tariff notice. One buyer asked to shift part of sewing to Vietnam to change country of origin. The factory replied that simple finishing in Vietnam would not be enough; they’d need substantial transformation—like knitting or major assembly—to legally mark the goods as Vietnamese.
The buyer split the line: keeping core styles in India but cutting quantities, while testing a new Vietnamese vendor for spring.
Price math example
- Before: A cotton shirt landed at $4.00 including the normal duty.
- After: Add 25% tariff on the customs value portion. If the customs value is $3.20, the extra duty is $0.80, pushing landed cost near $4.80.
- Retailers’ options: raise price, trim margin, reduce features, or switch suppliers.
Government resources and where to check rules
- The Office of the US Trade Representative (USTR) publishes tariff actions and updates. Use the USTR website to verify exemptions and deadlines.
- Coordinate with customs brokers to confirm whether goods qualify for the savings clause and how to document load dates and entry.
Legal and policy context
- The US and India have argued over duties and market access for years. The US ended India’s duty-free access under the Generalized System of Preferences (GSP) in 2019.
- The new tariff aligns with President Trump’s 2025 trade actions against multiple partners. Analysts warn that rapid rate changes push companies to rewire supply chains permanently.
What to do this week (action checklist)
- Importers:
- Freeze nonessential Indian POs while auditing SKUs against Annex II.
- Ask suppliers for proofs of shipment dates and entry timelines to claim the savings clause.
- Model price increases and prepare customer messaging.
- Indian exporters:
- Share detailed cost breakdowns with US buyers to find room for compromise.
- Explore bonded manufacturing and third-country processing only if it meets true “substantial transformation.”
- Logistics teams:
- Book space early from alternative origins and stagger arrivals to spread risk.
What comes next
- Diplomacy may bring carve-outs or changed timelines, but companies should not rely on quick relief.
- Expect retailers to fast-track vendor approvals in Vietnam, Indonesia, Bangladesh, and parts of Latin America. Some will test nearshoring for seasonal items.
- Analysis by VisaVerge.com suggests rapid tariff shocks tend to reshuffle long-term buying patterns. Once retailers qualify new vendors and rewrite assortments, volumes may not return to the original source country—even if duties fall later.
The human side
Workers in Indian factories worry about pay cuts as night shifts disappear. In the United States, small importers fear lost holiday sales if key SKUs slip. One family-run importer said they might skip a season rather than pass a 25% hike to customers during back-to-school.
Bottom line: The 25% tariff on Indian-origin goods is now in place, with a narrow savings window. Amazon and Walmart have paused or reduced orders and are scouting new sources. Importers must check Annex II, shipping dates, and exact duty math, then decide whether to reprice, reroute, or reduce.
For official tariff action updates and policy documents, consult the Office of the United States Trade Representative at ustr.gov.
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