US tariffs hit Indian exports: Brands reassess messaging, adex and markets

New Delhi: The recent imposition of a 26% reciprocal tariff by the United States on Indian imports, announced by President Donald Trump on April 2, 2025, will have significant repercussions across various sectors of the Indian economy, including the advertising industry. 

This development comes despite India's proactive measures to mitigate such actions, such as the removal of the 6% "Google tax" on digital advertisements aimed at appeasing US tech companies and averting stringent tariffs.

The elevated tariffs are expected to increase the cost of Indian goods in the US market, potentially leading to reduced competitiveness and a decline in export volumes. Sectors such as pharmaceuticals, apparel, and jewellery, which have substantial export ties to the US, may face decreased demand. 

This downturn could compel Indian brands to reassess their market strategies, possibly diverting focus to alternative international markets or strengthening domestic sales efforts.

A decline in exports and the resultant revenue shortfall for Indian companies could lead to budgetary constraints, prompting reductions in advertising expenditures. This financial strain could necessitate operational adjustments, including downsising or diversification of services, to maintain profitability.

Beyond budget reallocations, the tariffs could also influence brand messaging. Companies may increasingly highlight their “Made in India” credentials to appeal to domestic consumers, while exporters could emphasise cost efficiencies to maintain their competitiveness in the US market. Advertising campaigns are likely to focus on value-for-money propositions and resilience, following the pattern observed in previous trade disputes.

Indian brands might become more cautious with their advertising budgets, which could lead to intensified competition among platforms and potentially lower advertising rates as platforms strive to attract limited marketing funds.

The repeal of the "Google tax" was intended to foster a more favourable environment for US-based digital platforms operating in India. However, with the imposition of new tariffs, the anticipated benefits may be offset by broader economic challenges. 

In light of these developments, Indian brands may consider several strategic responses:

1. Market diversification: Exploring and expanding into alternative international markets to reduce reliance on the US and mitigate the impact of the tariffs.
   
   
2. Cost optimisation: Implementing measures to streamline operations and reduce costs, allowing for more flexible pricing strategies to remain competitive internationally.
   
   
3. Enhanced domestic focus: Shifting focus towards the domestic market to compensate for potential losses in export revenues, which may involve tailoring products and marketing strategies to local consumer preferences.
   
   
4. Digital transformation: Investing in digital marketing and e-commerce platforms to reach a broader audience more cost-effectively, leveraging data analytics to optimise advertising spend and improve return on investment.

The US's imposition of a 26% tariff on Indian imports presents a complex challenge for Indian brands and the advertising industry. While the immediate effects may include reduced competitiveness and constrained marketing budgets, proactive strategic adjustments can help mitigate these impacts. By diversifying markets, optimising costs, and embracing digital transformation, Indian companies can navigate this evolving landscape and sustain growth despite the heightened trade barriers.