US Tariff: Export-oriented brands hit pause on advertising 

The brewing tariff standoff between the US and India is fast turning into a high-stakes game for export-oriented sectors like FMCG, fashion, jewellery, textiles, electrical items among others. 

While policymakers in both capitals weigh their next moves, brands that once thrived on a steady American appetite are already feeling the tremors of a new 50% tariff on Indian imports—which came into effect on Aug 28. With their orders stuck, these brands have started hitting the pause button on discretionary spends at home to sustain the pressures.

A US court of Appeals last week ruled that the majority of the Donald Trump administration’s sweeping global tariffs are illegal. The decision, however, is not yet final, as the court has allowed the tariffs to remain in effect until October 14, giving the Trump administration a window to appeal to the Supreme Court.

Read more: Ad Spend Casualty? 

A prolonged tariff regime could turn inventory into dead stock, pushing exporters to frantically scout for buyers in Europe, the UK, and other emerging economies. And in the zero-sum world of trade wars, advertising often becomes the first expense to be slashed, leaving agencies bracing for the fallout. 

The signs of strain are already evident. Many clients have already pressed the pause button over the past few days, advertising executives told e4m.

Read more: Tariff Tango

According to Saibal Gupta, Managing Partner and CEO of Xperia Group, with higher tariffs squeezing margins and uncertainty looming over U.S. demand, several exporters are reassessing their marketing priorities.

“Campaign plans are being revisited, budgets are being trimmed, and in some cases, entire launches are being deferred. Many of our clients are already hinting at a steep cut in advertising spends. This includes brands exporting electrical goods and tiles to the U.S. markets,” says Gupta. 

Highlighting the broader concerns across the ad ecosystem, Shradha Agarwal, Co-Founder and CEO at Grapes Worldwide, noted that the steep 50% US tariff is driving product prices up and dampening consumer demand, creating a cascading slowdown that’s beginning to hit advertising budgets hard.

“Many of our clients who have presence in the US markets have already put marketing and other discretionary budgets on hold. Categories like beauty, lifestyle, FMCG (such as rice and milk products) and home & living are among the hardest hit,” Agarwal said. 

Agarwal stated that some brands, which had initially committed to spending, for example, $1,000 on a campaign, first scaled them down to $650, then $500, and eventually backed out completely. 

Agencies often deploy both their local and US teams to collaborate on projects for Indian clients. So, both the teams are facing the heat. 

While executives hope that affected clients will work to offset their losses by exploring new markets, setting up manufacturing units in the U.S., and expanding their domestic footprint, they admit such measures will take time. In the short term, advertisers have little choice but to redraw their marketing strategies and recalibrate their ad spends, observers say. 

When asked about pressures and its impact on their marketing strategy, Karunesh Bajaj, Executive Vice President - Marketing & Exports at ITC Limited, says, “Currently there are a number of global challenges including geo-political challenges, climate emergency and technological disruptions. Every challenge also brings with it several opportunities. Progressive enterprises are reimagining strategies to win the future in a turbulent world.” 

“The ITC Next strategy, articulated by Chairman Mr Sanjiv Puri, is designed to build structural competitiveness and scale new horizons of growth and profitability in every business. We will do so by also ensuring that we contribute meaningfully to sustainable and inclusive progress and national priorities,” Bajaj noted. 

Industry watchers warn that if the tariff drags on, the ripple effect could choke marketing budgets, slow product rollouts, and force MSMEs (medium, small and micro enterprises)—already operating on thin margins—to freeze hiring or even lay off workers and curtail their marketing spends. 

Crisil Ratings earlier this month said there will be a “second-order” impact on the earnings of export-oriented sectors such as diamond polishing, shrimp, home textiles and carpets, which will bear the brunt of US tariffs due to a “structural shift in demand in the US, with reduced discretionary spending driven by expectations of rising inflation”.

Amit Wadhwa, CEO, Dentsu Creative & Media Brands, South Asia, tempers the outlook with caution: “Some sectors are under pressure, but the government is monitoring the situation, and brands are already exploring potential markets in Europe and the UK. If tariffs remain for long, the advertising sector will feel the ripple effect.”

Not just another market

For many of these businesses, the US is not just another market—it’s the backbone of their revenue. 

For instance, nearly 30 per cent of exports from textiles, gems and jewelry sectors alone go to the US market. The US accounts for about 60 per cent of India's home textile exports and 50 per cent of carpet shipments, according to Crisil. The ready-made garments sector derives 10–15 per cent of its revenue from the US, while gems, jewellery, and footwear also count America as a top market.

Sensing a deeper challenge for semi-skilled workers, the textile, gems and jewellery sectors have sought COVID-19-era support for the industry to prevent job losses. 

Luxury brands 

“The new US tariffs are a wake-up call for the Indian textiles and apparel industry, especially for brands that cater to global markets,” says Salesh Grover, Business Head at OSL Luxury Collections, the Indian partner of global luxury fashion brands Corneliani and Camicissima Milano.

“For luxury and premium fashion retailers like ours, which are built on design excellence, quality, and refined craftsmanship, such policy shifts may lead to increased input costs, margin constraints, and logistical challenges. However, India’s strong manufacturing base offers room to recalibrate,” Grover noted. 

For India’s gem and jewellery exporters—who send over $10 billion worth of products abroad each year—the tariff shock could upend market strategies. Piyush Gupta, Director at PP Jewellers, warns of a direct hit: “For Indian jewellers, the tariff could slow down demand and reduce shipment volumes, forcing the industry to look at other global markets. Such trade barriers can affect not just sales but also employment and long-term growth potential.”

Ray of hope

Industry observers hope that the present crisis may also prompt brands to explore other markets, innovate and expand their footprint within India as well. This could be the right moment for the industry to double down on product innovation, creativity, sustainable practices, and value-driven exports to remain competitive on the world stage, industry leaders hope. 

Nitin Mehrotra, CFO at Numero Uno, says, “For Indian exporters, this presents a strategic opportunity to enhance market share, provided we stay competitive on quality, compliance, and delivery timelines. Volatility may impact order flows in the short term, but over the medium term, India could emerge stronger if it capitalizes on the China-plus-one sentiment and further eases trade logistics and infrastructure bottlenecks.”

This is a pivotal moment for the Indian luxury jewellery industry to shift focus from price competitiveness to brand-building, quips Mira Gulati, Founder & Principal Designer at Mirari. According to her, “Competing purely on cost is not sustainable in the premium space. Markets today value authenticity and design-led narratives far more than just affordability.”