- What changed in US trade policy (and why India gets pulled in)
- Winners & losers across textiles, engineering goods, and IT services
- Buyer playbook: re-quote vs. re-route vs. re-spec
- CFO checklist and template mail for US clients
The short
- Context: The US has raised/expanded tariffs on certain China-origin goods under Section 301 and tightened forced-labor enforcement (UFLPA). Spillovers hit Indian supply chains where China-origin inputs or high-priority UFLPA sectors (e.g., cotton) are embedded. (Illustrative; see sources below.)
- Winners: India-based exporters that can replace China supply on tariffed HS codes and prove clean provenance (traceable cotton, non-Xinjiang polysilicon/Al/PVC components).
- Vulnerable: Apparel/textiles with cotton provenance gaps; engineering goods with China-content BOM; services exposed to US procurement cuts even if “tariff-free”.
Exposure map (illustrative)
| Sector (HS/Service) | US share of revenue | China-content in BOM | UFLPA risk | Tariff pass-through | Net effect |
|---|---|---|---|---|---|
| Textiles & Apparel (61–63) | Fill % | Low–Med (yarn/fabric, trims) | High (cotton provenance) | Low–Med (price-sensitive) | Mixed: winner if provenance clean; risk if tracing weak |
| Engineering Goods (84–85) | Fill % | Med–High (electronics, castings) | Low–Med (PVC/Al sources) | Med (B2B contracts) | Risk where sub-assemblies/PCBs are China-origin |
| IT Services | Fill % | N/A (services) | Low | High (time & material/SoW resets) | Indirect risk via US capex/Opex deferrals & vendor consolidation |
Winners & losers — by lens
Likely winners
- Apparel exporters with traceable cotton + digital CoO; diversified trims (non-China).
- Engineering firms with localized sub-assemblies and alternate BOMs (Taiwan/ASEAN/EU inputs).
- IT service providers tied to cost-takeout/automation programs (counter-cyclical budgets).
Vulnerable pockets
- Micro/small apparel vendors with weak provenance or Xinjiang-linked risk (detentions, delays).
- Engineering exporters with China-dependent PCBs/castings and no alternates priced in.
- Services exposed to US procurement pauses in tariffed end-markets (EVs/solar/steel value chains).
Buyer playbook (what to send US clients)
- Re-quote: Provide dual BOM pricing—status quo vs. China-free inputs with lead times.
- Re-route: If routing via third countries, ensure substantial transformation meets rules—avoid simple trans-shipment.
- Re-spec: Offer spec changes (yarn count, alloy grade, component swaps) that preserve function but de-risk tariffs.
CFO checklist (copy/paste)
- Provenance Cotton trace → ginner → spinner → knitter/dyer → garment (retain docs; map to POs).
- BOM alt. Pre-approve non-China components with clients; lock second-source SLAs.
- HTS codes Validate correct HS/HTS classification; assess tariff-line sensitivity.
- Contracts Add tariff change pass-through and UFLPA audit-cooperation clauses.
- Buffers Build 2–4 week buffer for UFLPA holds; plan safety stock at US DCs.
Template note to US buyers
Subject: Tariff & UFLPA Update — Options to Keep Your Supply Chain On-Time
We’ve completed a tariff/UFLPA review for your programs. We can (a) maintain current specs with tariff pass-through, or (b) shift to alternate BOMs free of China-origin inputs with [X]-week lead time. Cotton provenance documents and audit trail are attached. Please advise your preferred path so we can hold production slots.