The United States’ decision to sharply raise tariffs on apparel imports from Bangladesh is already reverberating across South Asia’s garment-producing nations, upending sourcing strategies and fueling uncertainty in regional economies heavily reliant on textiles.
While Bangladesh faces the steepest levy—35% on garments starting August 1—analysts warn that India, Pakistan, and Sri Lanka could soon feel the impact in both direct and indirect ways.
Pakistan and India have held several rounds of negotiations with the U.S. to work out deals before President Donald Trump‘s August 1 deadline.
South Asia is the heart of global apparel manufacturing. Together, Bangladesh, India, Pakistan, and Sri Lanka supply billions of dollars of garments to American brands each year. The sector is a critical employer in all four nations:
India is the world’s second-largest textile exporter after China, supporting over 45 million jobs.
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Pakistan earns more than 60% of its export revenue from textiles and apparel.
Bangladesh relies on ready-made garments for 80% of total exports.
Sri Lanka has positioned itself as a hub for higher-value apparel, like sportswear and lingerie.
For decades, relatively low tariffs and trade preferences allowed South Asian suppliers to dominate global fast fashion, driving down prices in American stores.
With Bangladesh facing higher tariffs, many brands are exploring alternative sourcing. This creates a complex picture for neighboring producers:
India could see a short-term gain as buyers divert orders. However, U.S. officials have signaled that India may also face new duties as part of efforts to “rebalance trade,” introducing uncertainty.
Pakistan’s textile exporters are cautiously optimistic that they can capture some displaced volume, especially in denim and cotton knitwear. But concerns remain that tariffs may eventually be applied regionwide.
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Sri Lanka could benefit if buyers seek to shift to established suppliers outside Bangladesh. Yet the country’s higher production costs mean only premium orders are likely to move.
“This isn’t just about Bangladesh,” says Sanjay Kapoor, a Mumbai-based apparel consultant. “It’s a signal that the U.S. is rethinking its entire import strategy for textiles, and South Asia as a whole is in the crosshairs.”
Foreign investors and multinational brands often develop sourcing networks across multiple South Asian countries. If tariffs expand, regional manufacturing hubs risk losing the predictability that has underpinned billions in investment.
“American buyers want stability and clarity,” says Nadia Ahmad, a Karachi-based sourcing director for a European retailer. “They’re not getting either at the moment.”
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Industry groups in Pakistan and India have already begun lobbying their governments to negotiate exemptions or preferential treatment to avoid the steep costs Bangladesh is facing.
In Pakistan, where the textile sector employs around 15 million people, any decline in export competitiveness could trigger factory closures and layoffs. Similar fears echo across India’s garment clusters in Tamil Nadu, Gujarat, and West Bengal.
“Even if tariffs don’t hit India immediately, there is pressure on prices because brands expect suppliers to match Bangladesh’s low costs,” says Rohit Jain, an apparel exporter in Tirupur. “Margins are already razor thin.”
While the tariffs are framed as a policy to revive American manufacturing, they will likely push up prices for U.S. shoppers. South Asia supplies vast quantities of basic garments—jeans, T-shirts, sweatshirts—sold in American supermarkets and department stores.
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A significant shift away from Bangladesh will not happen overnight,” opines Ellen Chen, a New York-based retail analyst. “So even if other countries pick up the slack, production bottlenecks and higher tariffs are almost certain to raise prices.
Bangladesh is currently engaged in negotiations with the U.S. Trade Representative to explore options for reducing or phasing in tariffs. Meanwhile, Indian and Pakistani officials are reportedly preparing contingency plans if leviesextend to their textile sectors.
Trade experts say the developments highlight how vulnerable South Asia’s economies are to sudden shifts in American policy.
“South Asia has bet big on garments as a path to development,” says Kimberly Waters, a senior fellow at the Peterson Institute for International Economics. “These tariffs are a wake-up call: diversification is no longer optional.”
As the region braces for a potentially turbulent second half of the year, the stakes could hardly be higher—for factories, workers, and consumers around the globe.
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