The Trump tariffs have sent the global apparel sourcing sector into a tizzy, and all talk is about what's going to happen now. The discussion is varied and much of it hinges on what will happen to US retailers and consumers.
True, the current turmoil is the doing of the US, or specifically its maverick President Donald Trump, but this crisis also presents all countries a chance to rethink their US strategy.
The way the wind will eventually blow depends on a number of factors. First, which countries are likely to give in, and submit before most others (read, rivals) do. Second, which countries have the capacity to supply to a big market, scaling up massively in a matter of weeks or months. Third, how the bigger blocs (like the European Union) or countries (China and India) react to the Trump tariffs given that apparel and textiles are only one component of their bilateral trade.
Giving in first
As the markets crashed—wiping out $6 trillion over just two days since the tariff announcement was made—and anger poured out into the streets of American cities, Trump to everyone’s surprise disappeared from the scene, putting his mind to more important things as golf, as we have been told.
The job of talking to the Press has been left to people like Scott Bessent, Secretary of the Treasury; Howard Lutnick, Secretary of Commerce; Jamieson Greer, United States Trade Representative; and Peter Navarro, Senior Counselor for Trade and Manufacturing. However, what has come from them is more bellicose rhetoric, and less of the much-needed firefighting measures.
Among the first of the garment exporters to cave in has been Viet Nam. It has sought negotiations with the US, and offered to eliminate tariffs on American goods in exchange for relief from the tariffs. Additionally, Viet Nam agreed to reduce tariffs on several American products, including liquefied natural gas and automobiles, and even approved a pilot programme for Starlink services.
The EU, for all its confrontational talk initially, has proposed a zero-tariff scheme of things. India is still deliberating what to do, though the signals are that of lowering tariffs. China, of course, has retaliated with an identical 34% levy on US goods, and the battle on this front is bound to escalate.
Many of the current exporters of clothing to the US are apparel-driven economies to a considerable extent. Prime examples of this are the South Asian countries of Bangladesh and Sri Lanka and the Southeast Asian nations of Viet Nam and Cambodia. Herein, Bangladesh faces 37%, Cambodia 49%, Sri Lanka 44%, and Viet Nam 46%. All of them are expected to relent to the US demand. But none of these are big economies, and the chances of their domestic markets being flooded by American goods is on the lower side, though food and agricultural products would be a matter of concern.
All other nations that export apparel to the US face high tariffs: Indonesia (32%), Pakistan (30%), Jordan (20%) and Nicaragua (19%). Both Honduras and El Salvador have to reckon with the baseline tariff rate of 10%, while Mexico—which was slapped with tariffs in February—has been given a respite. Many others export garments to the US, but are currently too negligible to be counted.
While much of the ongoing discussion has centred around countries in Asia and the impact that the tariffs can have on garment workers in these countries, two big players seem to have been turned a blind eye to. Turkey and Egypt, both important in cotton and apparel players in their own right, have been awarded only 10%. Neither has figured among the Top 10 apparel importers in the US in the last 10 years. On paper at least these two countries should be seen to be holding an advantage.
Variables are too many, and if numbers alone were to determine who would emerge as a big supplier of apparel to the US, then Honduras, El Salvador, Egypt and Turkey emerge front-runners. But the two Central American countries are tiny in size, and relatively small economies. Expecting them to fill up a void that would be left by China is to expect them to scale up both capacities and production. That's unlikely to happen any time soon, and that contention also assumes that those like Bangladesh, Sri Lanka, Cambodia and Viet Nam would accept the tariffs they have been slapped with.
The dark horses here could possibly come from Africa. Both Ethiopia and Kenya have to contend with the baseline tariff rate of 10%. While the biggest African apparel exporter South Africa faces 31% and Lesotho a whopping 50%, the gainers could be both Ethiopia and Kenya but they would have to boost capacity and ramp up production. This is probably the chance that they had been waiting for all these years.
