The election of Donald Trump has sparked concerns in India and across the world that the President-elect’s America First policies will raise the heat for other countries and their companies.

Tighter regulation of Indian companies’ investments and hiring in the US, and stricter enforcement in cases of malpractices are likely, law firms said, as they suggest clients to include ‘Force Majeure’ and ‘Material Adverse Change (MAC)’ provisions to cover shifts in trade policies, tariffs, and sanctions. Force Majeure is a legal concept the absolves the parties from their obligations in case of events beyond their control.

“Trump’s increased focus on an ‘America First’ policy means inbound investments from India—and potentially from global investors—will become more complex. Heightened regulatory scrutiny will likely affect sensitive sectors like technology, critical minerals, and issues related to local job creation,” said Rishabh Shroff, partner (co-head, private client and head, international business development), Cyril Amarchand Mangaldas.

Trump was elected the 47th US President, defeating incumbent vice president Kamala Harris after the 5 November polls. This marks his second term after serving from 2017 to January 2021, a period marked by tariff wars, trade restrictions, and unpredictable foreign policy. Trump will officially take office on 20 January for a four-year term, alongside his vice president J.D. Vance.

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An MAC clause, typically used in mergers and acquisitions, permits a party to back out of a contract if significant change happens that substantially lowers the value of a company or negatively impacts the outcome of an agreement.

Russell A. Stamets, partner at New Delhi-based law firm Circle of Counsels, warns companies of stricter enforcement of US laws under the Trump administration. “I foresee greater extraterritorial enforcement, especially of the US Foreign Corrupt Practices Act (FCPA), which has been quiet in recent years. About half of those convicted under the FCPA are foreign nationals. If the US wants to find you, they will. Companies should prepare accordingly or face the consequences.”

The Foreign Corrupt Practices Act is a US law that prohibits American firms and individuals from paying bribes to foreign officials to further business deals.

There are other clauses that law firms are pitching to clients across sectors in their deals with US-based firms.

Shroff of Cyril Amarchand Mangaldas advises focusing on the ‘conditions precedent’ clause to ease extensive filings and pre-approvals that are time-consuming. A condition precedent in a commercial contract details an event which must take place before a contract, or a party’s obligation(s) under a contract come into force

Shiju P.V., senior partner at IndiaLawLLP, recommends including price adjustment clauses (escalator clauses) to adjust contract prices due to increased tariffs post-execution. This clause allows for an automatic increase in wages or prices if certain specified conditions change in the future.

Trump’s protectionist policies, marked by his Make America Great Again slogan, include higher tariffs—10% on all imports and up to 60% on Chinese-made products.

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The US was India’s top trading partner during the first half (H1) this year, with exports hitting $41.6 billion—a 10.5% rise year-on-year (y-o-y), according to a report by Global Trade Research Initiative (GTRI).

India and the US have comprehensive global strategic relationships, said S.P. Sharma, chief economist at PHDCCI. He said trade between the two nations had increased during Trump’s first term, and business sentiments are expected to be even higher in Trump 2.0.”Going ahead, we expect bilateral relations to expand further in Trump 2.0,” Sharma said.

Indian companies are actively investing in the US, with total investments reaching $80 billion to date and creating over 400,000 jobs, according to a Confederation of Indian Industry (CII) 2023 report. In 2023 alone, Indian companies made fresh foreign direct investment (FDI) of $4.7 billion, representing about 3% of the US’s total inward FDI.

Indian mergers and acquisitions (M&A) activity in the US has also been robust, marked by deals such as Cognizant’s $1.3 billion acquisition of Belcan, Bharat Forge’s purchase of AAM India Manufacturing for ₹544.5 crore, and Exicom’s $37 million acquisition of Tritium, a fast-charging tech firm.

However, law experts say M&A deals by Indian firms in the US will have to pass through stricter regulatory scrutiny under the new Trump administration.

Law firms from New Delhi to New York are speaking to investment banks and clients on M&A opportunities, Bharat Anand, senior partner, Khaitan & Co, said.

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Kunal Sharma, a partner at Singhania & Co., said, “The Trump administration’s protectionist policies and tariffs will make cross-border deals more challenging, especially for companies with supply chains impacted by US-China trade restrictions.” He added that the Committee on Foreign Investment in the United States (CFIUS) is likely to increase scrutiny in sensitive sectors such as technology and defence, while potential rollbacks on Biden-era antitrust policies could further complicate M&A activity.

Law firms are also tracking how the new government will change visa rules that will impact workforce movements. Indian companies conducting business in the US must implement legal safeguards to address immigration challenges affecting workforce mobility.

Yogesh Singh, partner and head of corporate practice, Trilegal, has advised its clients that they  should include contingencies in employee agreements to address labour migration issues.

Lawyers also recommend that Indian firms ensure compliance with US immigration laws, maintaining meticulous documentation and records for all visa applications.

IT services companies move employees to markets where their clients are located on temporary work visas. In June 2020, during his previous term as US president, Trump had suspended the issuance of all H-1B work visas, including for Indians. The US typically offers 85,000 H-1B visas annually, with a large proportion going to Indian nationals.

Queries emailed to Tata Consultancy Services, Wipro, Infosys, Tech Mahindra and HCL Tech, which have large workforces in the US remained unanswered.

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The bigger demographic watching his moves will be Indian students, for whom US colleges have always been a top choice—more so now as Canada and Australia have clamped down on the number of international students. According to a Mint report in April, more than 260,000 Indian students went to the US in the 2022-2023 academic session, a 35% jump over the previous session.

Trilegal’s Singh said, “One short-term impact of such protectionist policies, border checks, and import controls could be rising prices for select commodities—costs companies may pass on to consumers. In the long term, key changes could emerge in tax regimes, enhanced labour management checks, corporate compliances, and USD-INR currency fluctuations.”

“The India-US relationship has progressively improved due to our shared values of democracy and free markets,” said Gopal Jain, managing partner, Gaja Capital. “India’s progress has received bipartisan support from the US political establishment. The strong chemistry between our respective leaders, Modi and Trump, will help in accelerating the progress that the two nations have made in multiple aspects of the relationship including and beyond trade, investments and global security,” Jain added.

Donald Trump has won the US Presidential election, and this win will definitely influence the country’s trade and business sectors, including the fashion industry. Trup is known for his ‘America First; stance, and his policies are likely to emphasise more on domestic production, restructuring tariffs, taxes, and trade agreements. These changes will affect the fashion brands that depend on international supply chains but will also change consumer pricing, availability, and industry practices. Let’s take a better view of what might lie ahead for the United States fashion industry by considering the trade policies of Donald Trump and also have a speculative look at what things might have looked like under a Kamala Harris administration.

Trump’s ‘America First’ policies and their impact on fashion
The Donald Trump administration has always taken enormous interest in transforming trade policies to support the American product. During his first gig as the President of America, his campaign of ‘America First’ aimed to strengthen domestic producers and minimise the country’s dependence on overseas products at large, as is the case with most fashion brands. Tariffs, a centrepiece of his trade policy, directly impacted the cost and sourcing of raw materials and manufactured goods for fashion brands across the US. These tariffs often covered key inputs like textiles, clothing, and accessories, which are typically sourced from Asia, especially China.

The intention of the policy was to bring back more fashion manufacturing jobs into the US. Reality, however, proved otherwise. Although tariffs are expected to boost domestic manufacturing, most of the brands could not find a big manufacturing facility for their ready-to-wear apparel due to infrastructure and high-cost issues associated with running an apparel manufacturing facility in the US. Most the brands were consequently faced with an increased cost of production they either pass on to their consumers or absorb at personal cost.
That scaled back their pricing structures or compromised on the range and quality of materials adopted. Fast fashion brands were unable to sustain their appeal of low cost due to a rise in costs for importing. This meant both luxury and affordable brands succumbed financially, but some smaller brand went under due to lack of ability to meet higher production costs.

The goal was to bring in more fashion manufacturing jobs in the US. But things turned out a tad too complicated for that reason alone. Even though it intended to make domestic production more attractive, high cost factors and the absence of such infrastructure in the country as far as large apparel manufacturers are concerned made a turnaround unattractive on behalf of most brands coming home without raising the overall costs. As a consequence, production became more costly for them, and most of these brands either passed this along to their customers or absorbed it themselves in the form of reduced profit margins.
This meant, therefore, that luxury brands of fashion and high-class retailers would have to trim down their price structures or reduce the scope and grade of material they used. Conversely, fast fashion brands suffered the pressure of losing their ‘value for money’ by rising import costs. Eventually, the new production costs presented both the luxury and economy brands with financial stress, to which some smaller brands ultimately closed down.

Tariffs and taxes on imports: A mixed bag
Under Trump, the United States placed tariffs on goods from several countries, targeting China in particular, which represents a large share of raw materials and finished goods used by American fashion brands. The tariffs were placed on billions of dollars’ worth of Chinese goods, which include various textiles, clothing, and accessories.
For some of these companies, the tariffs multiplied the price paid for raw materials, stripping off profits or forcing brands to raise prices to consumers. Large brands- Nike and Levi’s-diversified their manufacturing base across different countries. They easily arranged for shifting their production units to other geographic locations, such as Vietnam or Mexico. The smaller brands had it tougher. Many had to find other places to manufacture products, an expensive and time-consuming process involving renegotiating contracts, finding new suppliers, and adjusting to the new production environment.
Changes had the effect of making items on clothing and accessories costlier for consumers, especially on brands that had no other choice but to pass those extra costs down the line. This made it an incredibly difficult landscape for the US. fashion market in terms of brands and consumers trying to adapt to higher costs of fashion items.

Made in USA, a distant dream?
Infrastructure on textiles and apparel in manufacturing sectors has declined over time when such production was outsourced because it was cheaper elsewhere. However, with renewed vigour toward domestic manufacturing, this could not be adequately answered for a number of infrastructural, skilled workforce needs, and capacity reasons-especially given the sensitivity in apparel markets to prices-paying high prices for apparel as much as possible. Plus, the cost of garments and apparels produced within America would be significantly more costly compared to other nations as well, where the overhead cost of labor and making was relatively lower.
Brands that attempted to produce domestically often found it challenging to compete with the affordability of imported goods. For instance, denim production in the US can cost two to three times more than in countries like Bangladesh or China. As a result, only high-end or niche brands were able to adopt the ‘Made in the USA’ label without losing their competitive edge.

How the fashion industry adapted
The fashion industry sought creative changes in order to adapt to the new landscape of trade. Many brands started looking to diversify their supply chains, reducing dependence on China and shifting production towards countries with favorable trade agreements such as Vietnam, Indonesia, and India. The tendency continues to grow as more and more brands seek ways to avoid tariffs and reduce production costs.
Some companies began a nearshoring strategy by bringing operations closer to the United States in places such as Mexico or through Central America. The nearshoring option allows brands to maintain supply lines that are shorter than from Asia; however, it means going up against different kinds of logistical hurdles and, often, slightly higher production costs from Asia. Besides this, many brands are investing in sustainable practices and using materials that appeal to their growing consumer base that finds value in environmental responsibility while using this shift as an opportunity to market their services as potentially more expensive.

Advantages and disadvantages of Trump’s policies toward the fashion industry
Benefits
Boosting local brands: Trump’s policies focus on the production of more locally manufactured items, thus boosting those firms that already were using more of local products or could now shift their production.
Less vulnerability in supply chain: In the past, imposing tariffs on the products from China led the firms to diversify their supply chain so that in the future any such disturbance may not again create the same type of problem for them.
Drawbacks
Increased production cost: If Trump sticks to his old plan, then the prices of buying imported products will rise, and things may become unaffordable for the consumers.
Economic uncertainty: Under Trump’s rule, constant changes in trade policies created uncertainty, complicating long-term planning and budgeting for many companies.
Reduced market growth: Higher prices due to tariffs will limit consumer purchasing power, especially for fast fashion brands that rely on low-cost goods.

How Kamala Harris’ Presidency may have affected fashion commerce
Had Kamala Harris become the president instead of Donald Trump, the fashion trade could have seen a different terrain. Harris has frequently championed free trade and economic policies that focus on inclusivity and sustainability. Her administration might have taken a more cooperative approach to trade with nations like China and in the multilateral trade agreements. This would have meant much stability for the industry.
Harris’s approach to fashion trade likely would have emphasised sustainable practices, and her administration might have introduced incentives for brands that prioritise ethical labour practices and environmental responsibility. For example, instead of tariffs, Harris might have encouraged companies to shift toward sustainable fabrics and production methods through tax breaks or grants. This could have provided both economic and environmental benefits, appealing to a growing consumer base that values eco-conscious practices.

Furthermore, as a woman of colour and a daughter of immigrants, Harris may have fostered stronger relationships with Asian countries, including India, where a large portion of textile production occurs. This would have facilitated smoother trade relationships and helped maintain affordability for fashion imports.