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, and electrical items.

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 orders stuck, many of these exporters have begun hitting the pause button on discretionary spends at home, including advertising, to sustain 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 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.

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 pressed pause on campaigns over the past few days, advertising executives told e4m.

According to Saibal Gupta, Managing Partner and CEO of Xperia Group, higher tariffs are squeezing margins and creating uncertainty in US demand. “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 US markets,” says Gupta.

Highlighting the broader concerns, Shradha Agarwal, Co-Founder and CEO at Grapes Worldwide, noted that the steep 50% tariff is driving product prices up and dampening consumer demand, creating a cascading slowdown.

“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.

Some brands, she added, had initially committed to spends of $1,000 on a campaign, later scaling them down to $650, then $500, before backing out completely.

Tariff Tango
Agencies that deploy both their local and US teams to collaborate on projects for Indian clients are facing the heat on both sides.

Executives hope affected clients will offset losses by exploring new markets, setting up manufacturing in the US, or expanding their domestic footprint, but admit such measures will take time. In the short term, advertisers have little choice but to redraw marketing strategies and recalibrate ad spends.

Karunesh Bajaj, Executive VP - Marketing & Exports at ITC Limited, took a longer-term view: “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.”

He pointed to ITC’s “Next Strategy,” designed to build structural competitiveness and scale new horizons of growth while ensuring sustainable and inclusive progress.

Industry watchers warn that if tariffs drag on, the ripple effect could choke marketing budgets, slow product rollouts, and force MSMEs—already operating on thin margins—to freeze hiring or even lay off workers.

Crisil Ratings earlier this month flagged a “second-order” impact on export-oriented sectors such as diamond polishing, shrimp, home textiles, and carpets, citing a “structural shift in US demand, with reduced discretionary spending driven by expectations of rising inflation.”

Amit Wadhwa, CEO, Dentsu Creative & Media Brands, South Asia, tempered 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 businesses, the US is not just another export destination—it’s the backbone of revenue.

Nearly 30% of exports from textiles, gems and jewellery sectors go to the US market. America accounts for about 60% of India’s home textile exports and 50% of carpet shipments, according to Crisil. The ready-made garments sector derives 10–15% 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, these sectors have sought COVID-era support to prevent job losses.

Luxury Brands Under Pressure
“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, 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 strategies. Piyush Gupta, Director at PP Jewellers, warns: “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
Observers believe the crisis may also push brands to explore other markets, innovate, and expand their footprint in India. This could be the right moment to double down on product innovation, sustainable practices, and value-driven exports.

Nitin Mehrotra, CFO at Numero Uno, sees opportunity: “For Indian exporters, this presents a strategic chance 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.”

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