"US retailers rethink sourcing strategy as tariff pressure mounts", 21 August 2025

The 25 per cent additional US tariff on Indian goods is just round the corner, and a significant shift is underway in sourcing strategies...

...exporters across India have received communications from several global brands requesting that they pause shipments until further notice. This is seen as a direct response to the tariff escalation pushed by US President Donald Trump...

Analysts predict that the resulting disruption could lead to a 40 per cent to 50 per cent decline in export orders from the US, translating into an estimated revenue loss of $4 to $5 billion for the Indian textile sector.

Buyers, now facing increased costs, are reportedly negotiating hard with Indian suppliers or simply redirecting orders to alternative sourcing destinations.

One of the biggest beneficiaries of this development appears to be Bangladesh. A garment exporter based in Dhaka remarked that orders have already started to shift...

Bangladesh...holds several strategic advantages vis-à-vis many of its competitors, including competitive labour costs, lower tariffs, and a responsive manufacturing ecosystem. There is also another factor now...the country’s plan to significantly ramp up its import of US cotton and man-made fibres (MMF) from the US.

Under the new US tariff structure, exported products that contain 20 per cent or more raw materials sourced from the United States are partially exempt from countervailing duties. For example, if a Bangladeshi garment is made with 50 per cent US-origin cotton, the 25 per cent tariff will not apply to that 50 per cent portion...

Reports suggest that the Bangladeshi apparel industry is now actively working to double its imports of US cotton over the next year...

In light of this, Bangladesh’s appeal as a sourcing destination is likely to grow among US buyers...With the prospect of reduced costs and fewer trade complications, the shift in orders may accelerate further...