From 50% to 18%: What the Trade Deal Is Worth to a Tiruppur Knitter

Tiruppur makes the T-shirts sold in American malls. For six months it competed with a 50% handicap. Eighteen percent is not good news. It is survivable news.

A deal tied to oil

On February 2, the United States cut its tariff on most Indian goods from 50% to 18%. In return, India agreed to stop new purchases of Russian oil, which had been the reason for half of the earlier tariff. It was a reminder that trade deals are no longer just about trade. Energy, security and foreign policy are negotiated in the same package.

Tiruppur, near Coimbatore, is India’s knitwear capital. It produces a large share of the country’s cotton T-shirts, innerwear and children’s clothes, and the US has been one of its biggest buyers. My father’s college friend owns a small export unit there with about 120 workers. In September he lost two American buyers. In February he started getting calls again.

Why 18% is enough

Eighteen percent sounds high, and it is much higher than what Indian exporters paid before 2025. But tariffs are not judged in isolation. American buyers compare Indian prices with Bangladesh, Vietnam and Cambodia. Most of those countries face tariffs of around 19% to 20%. At 50%, Tiruppur could not compete. At 18%, it is slightly ahead of its rivals on tariffs, and it can compete on quality, speed and cotton supply.

This is what economists mean when they say trade is about comparative advantage. A country does not need to be the cheapest at everything. It needs to be relatively better at something than the alternatives. Tariffs can wipe out that advantage, and lowering them can bring it back.

What the six months cost

The damage from the high-tariff period will not disappear immediately. Some American buyers signed year-long contracts with other countries and will not switch back until those end. Some smaller Tiruppur units closed and their workers went home to villages. Buyers also remember which suppliers were unreliable during a shock, even when the shock was not the supplier’s fault.

The deal also carries a hidden cost for India. Russian oil had been sold at a discount, and replacing it with oil from other sources will raise India’s import bill somewhat. That cost is spread across the whole economy, while the benefit is concentrated in export towns like Tiruppur. Trade-offs like this are why trade policy is hard. Somebody always pays, and it is rarely the same person who gains.