After the US administration, led by President Donald Trump, announced a 35% tariff on Bangladesh, with particular implications for the apparel and textile sector, shares of Indian textile companies, including Gokaldas Exports, KPR Mill, Vardhman Textiles, and Arvind Ltd, soared up to 8.2% in intraday trading on Tuesday, 8th July.
Leading the advances among textile stocks, Gokaldas Exports’ shares jumped 8.2% on Tuesday, peaking at Rs. 974.70 (US $ 11.37). Closely after, Vardhman Textiles’ stock increased 7.9% to reach Rs. 537.70 (US $ 6.27). Arvind Ltd.’s shares increased 2.9% to reach an intraday high of Rs. 356.35 (US $ 4.16), while KPR Mill’s shares increased 4% to reach Rs. 1,204.85 (US $ 14.06) during the session.
The recently declared tariff, which goes into effect on 1st August, is a minor decrease from the 37% rate that was first suggested in April. It is anticipated to affect Bangladesh’s competitiveness in the global apparel supply chain, despite the fact that it is still far higher than the typical 10% tariff baseline.
The announcement has already caused American purchasers to reevaluate their sourcing strategy, even if the US has left the door open for negotiations in the weeks before the implementation.
The increase in tariffs follows a recent trade deal between the US and Vietnam that levies a 20% tax on direct Vietnamese exports and a higher 40% levy on transshipped commodities, or shipments that are routed through Vietnam but originate in other nations in order to get over tariff walls.
India’s textile exports to the US are currently subject to a 10% tariff; but, because of product classifications and differential rates, some areas are subject to duties of up to 26%.
It is anticipated that the change in pricing dynamics may realign competitive advantages, particularly if additional discussions go in India’s favour. Given the return of an Indian delegation from Washington last week, the industry is probably going to keep a close eye on the events surrounding a possible trade deal between Russia and the United States.
Under such a pact, any reduction in tariffs on Indian textile exports might boost India’s ability to compete on price and increase its market share in the US. It should be highlighted, too, that India’s export market advantage would diminish if tariffs on Indian goods stay the same while those on other items—particularly those from Vietnam—are lowered.
