Trump’s 50% tariffs could reshape India’s festive ad spend

President Trump's announcement to double tariffs on Indian imports to 50%, effective August 27, 2025, has prompted India's advertising industry to reassess spending strategies and market positioning. The move, aimed at penalising India for purchasing Russian oil, affects nearly all of India's $86.5 billion in annual goods exports to the US. According to a BBC report, almost all of India's annual goods exports to the US stand to become commercially unviable if these rates sustain, with a potential GDP impact of 0.2-0.4% from even a 25% tariff.

The timing of this policy announcement is particularly crucial, coming as India's AdEx was expected to grow by 7.8% year-on-year to ₹1371 billion ($15.9 billion), according to MAGNA’s projections.

However, the advertising market now faces budget reallocations as companies respond to changing trade dynamics. The timing coincides with India's festive season planning, when brands typically increase advertising investments across categories.

Festive marketing strategies to face adjustment

The immediate casualties of Trump's tariff announcement are becoming clear, with export-oriented sectors that have traditionally been significant advertising spenders preparing for budget reductions. Krishnarao Buddha, Independent Brand Consultant and former Senior Category Head at Parle Products, explains the direct impact on specific sectors.

"The immediate impact will be felt most by export-oriented sectors with a high dependence on the US market, such as Gems & Jewellery, Textiles, Leather, Auto components, etc. These categories are likely to cut back ad spending first," Buddha says.

The gems and jewellery sector, traditionally a significant advertiser during festive seasons, faces particular challenges given its export dependence. 

Suresh Ramalingam, CEO, Ipsos India, believes that it will take a few months before the impact of 50% Trump Tariffs will be felt. While he echoes Buddha’s statement that there would be cutbacks in ad spending by certain sectors, including the automotive, retail and jewellery, Ramalingam comments, “domestic brands which instil national pride could capitalise on the opportunities emerging within the country and increase ad spends to woo domestic consumers.”

The tariff implementation timing, just before India's festive season, creates planning challenges for marketing strategies already in development. 

“Sectors heavily dependent on exports and imports could see the impact of these steep tariffs on the upcoming festival season and curtailing of sales promotion budgets – unless negotiations between India and the Trump administration lead to some resolution reaching the middle ground,” stated Ramalingam.

The festive period typically sees brands spending approximately $3.9 billion on advertising, marketing and promotions, according to media reports. Moreover, a report suggests that festive shoppers are planning to spend an average of Rs 16,500 this year, with the majority of consumers planning to start their festive shopping before September. Among these, 90% of shoppers believe online ads are important in helping them discover new products and promotions.

Rahul Vengalil, CEO & Co-founder, tgthr, provides context on the broader economic picture and its advertising implications.

"First things first, India runs on an internal consumption economy a lot more than exports. In the export also, 40% of our export categories are left out of the tariff.” 

Apart from the few categories mentioned above, Vengalil believes that categories like Agro/Farming and Apparel/footwear will likely be impacted. 

“I believe from an advertising POV, this is more a psychological challenge, and if we look beyond the muddled waters, I think we should be fine," Vengalil says. “FMCGs are big spenders during the Diwali period & Coke/Pepsi group falls under this bracket, Food chains fall under this category, E-commerce giants like Amazon fall under this category. So there is going to be some tension, uncertainties and definite impact on the adex," he continues.

However, he acknowledges the potential for consumer behaviour to drive broader market impacts. If consumers start taking emotional decisions and boycott US brands, then the situation could spiral for the worse. 

Vigyan Verma, Founder of The Bottom Line, a brand consulting firm, comments that India benefits through exports of US brands manufactured in India (Apple, Nike, Levi's, etc), although industries like leather, textiles & apparel, and gems & jewellery are directly impacted by US tariffs. American brands with substantial festive advertising presence face the challenge of maintaining market presence while navigating potential consumer sentiment shifts. 

Verma says, “Robust local set-ups for US corporate brands like Coca-Cola, Pepsico, P&G, and Colgate-Palmolive exist along with manufacturing units, and these contribute to our economy and employment of our citizens.”

However, Buddha expects strategic adaptations across festive marketing. "The festive season marketing, typically a bellwether for annual ad spends, will require rapid adaptations, budgets may shrink for global luxury brands and imported categories, but surge for domestic brands leveraging the national pride."

This may lead to messaging that emphasises craftsmanship heritage while adjusting international market references.

Media planning could shift toward performance channels

Budget pressures and the need for measurable results could accelerate existing trends toward digital and performance-driven advertising channels. Companies seeking cost-effective reach during uncertain periods could adjust their media mix strategies.

"On the media mix front, brands will trim high-cost TV and print in favour of performance-driven digital channels, micro-influencers and native content. Expect hyperlocal targeting, short-form video storytelling with a greater focus on measurable ROI," Buddha explains.

The shift toward performance-driven channels reflects immediate budget optimisation needs and longer-term strategic thinking about market engagement. Micro-influencer strategies offer authentic local voices and cost-effective reach, particularly valuable when brands navigate sensitive political and economic terrain.

Vengalil notes, “Videos will still remain the most important medium, be it digital or linear Television. Print will play a key role for a lot of retail clients in the coming days."

Hyperlocal targeting becomes more relevant as brands connect with specific regional sentiments and economic concerns. As per 2024 reports, 47% of Indian consumers were influenced by short-form videos while making their festive purchases. Short-form video content, already dominant in India's digital landscape, provides flexibility for rapid message adaptation as situations evolve.

Domestic brands could find growth opportunities

While some sectors contract spending, others have the potential for increased investment. Domestic-focused industries view the tariff situation as an opportunity to strengthen their market position and capture consumer attention.

"Conversely, certain sectors with huge domestic consumption like Agriculture produce, FMCG, homegrown electronics and regional consumer durables could see increased marketing investment as brands try to capitalise on the Vocal for Local sentiment," Buddha observes.

India's FMCG sector, which grew 10.6% in the October-December quarter of 2024, driven by rural demand, is positioned to benefit from this shift. 

The advertising industry's response requires balancing immediate crisis management with long-term strategic positioning. "The chances of anti-American sentiments were somewhat high immediately after the additional 25% tariff announcement. Citizens may continue to view the United States as an unreliable partner, but that may not translate into hatred for American brands," Verma explains.

Experts also believe that homegrown brands will try to use the 'Made in India' slogan in their messaging. 

"If the crisis prolongs, the overall economy could get impacted, and then, of course, brands across board (not just American) could face business pressures leading up to the festive season, and that will require holistic tactical interventions- for example, pushing smaller packs, not just advertising spends and media mix tweaks," Verma adds.

As of now, BJP national spokesperson Syed Zadar Islam has claimed that India faces minimal tariff impact due to the "57-58% contribution of local consumption to our GDP".

But, if it were to affect brand spends, advertisers and agencies will need to focus on keeping consumer trust at the core with the agility to adapt messages and platforms, helping them maintain the momentum during this period of policy-induced uncertainty.

Prime Minister Narendra Modi is most likely going to visit the United States in September for the United Nations General Assembly (UNGA) and could schedule a meeting with President Donald Trump.

As the August 27 implementation date approaches, decisions regarding budget allocation, messaging strategy, and media planning will influence India's advertising market trajectory. The tariff policy serves as a test of the industry's ability to adapt to changed economic conditions while maintaining market vitality and consumer engagement.