India’s neighbours Bangladesh, Sri Lanka and Pakistan all got better rates than India as US President Donald Trump put steep tariffs on exports from dozens of trading partners, including Canada, Brazil and Taiwan, ahead of the trade deal deadline Friday.
Bangladesh, the world's second-largest garment supplier, heaved a sigh of relief after negotiating a 20 per cent tariff on exports to the US, down from the 37 per cent initially threatened, bringing relief to exporters.
Dhaka’s rate is in line with other major apparel-exporting countries such as Sri Lanka, Vietnam, Pakistan and Indonesia. India will face a steeper 25 per cent tariff.
"Protecting our apparel industry was a top priority, but we also focused our purchase commitments on US agricultural products. This supports our food security goals and fosters goodwill with US farming states," Khalilur Rahman, Bangladesh’s national security adviser and lead negotiator, told Reuters.
Muhammad Yunus, head of the country's interim government, called it a "decisive diplomatic victory" for Bangladesh, which has a $40-billion apparel export sector -
The readymade garments sector is the backbone of Bangladesh's economy, accounting for more than 80 per cent of total export earnings, employing about 4 million workers, and contributing about 10 per cent to its GDP.
"While the 20 per cent tariff will cause some short-term pain, Bangladesh remains better positioned than many of its competitors," Mohiuddin Rubel, additional managing director at Denim Expert Ltd, which makes jeans and other items for brands including H&M, told Reuters.
In India, Chintan Thakker, chairman of industry body ASSOCHAM in Gujarat, a major apparel exporter, said Delhi was hoping that the tariffs will be rationalised.
"We will have to recalibrate our strategies depending on the final tariff imposed,” Thakker told Reuters.
Sri Lanka, Pakistan cautious
Pakistan, which exported about $4.1 billion worth of apparel to the US in the 2024 fiscal year, secured a tariff rate of 19 per cent, but industry figures were cautious about the immediate impact.
"Considering India's lower production costs and the likelihood of it negotiating reduced tariffs in the near term, Pakistan is unlikely to either gain or lose a meaningful share in the apparel segment," Musadaq Zulqarnain, founder and chair of Interloop Limited, a leading Pakistani exporter, told Reuters.
"If the current reciprocal tariff structure holds, significant investment is likely to flow into DR-CAFTA countries and Egypt," he said, referring to a trade agreement between the US and a group of Caribbean and Central American countries.
Sri Lanka also secured a 20 per cent tariff rate from the US, which accounted for 40 per centof its apparel exports of $4.8 billion last year.
"The devil will be in the details as there are questions over issues such as trans-shipment, but overall it's mostly good," Yohan Lawrence, secretary general of the Joint Apparel Associations Forum, a Sri Lankan industry body, told Reuters.