India’s Textile Sector Gains After US Imposes 35% Tariff on Bangladesh

Shares of Indian textile companies jumped sharply in early trade on Tuesday after the United States announced a steep 35% tariff on imports from Bangladesh, triggering optimism about export diversion in favour of Indian firms.

At the time of writing at 1:35 pm, Gokaldas Exports were trading over 2.24% gain, Vardhman Textiles gained 3.88% in the mid market hours. Welspun Living added around 2%, while Trident, KPR Mill, and Arvind Ltd. also traded higher amid strong investor interest across the sector.

The market reaction came shortly after US President Donald Trump sent a formal letter to Bangladesh’s Chief Advisor Muhammad Yunus, stating that the new tariff would take effect from August 1, 2025. “We will charge Bangladesh a tariff of only 35% on any and all Bangladeshi products sent into the United States, separate from all sectoral tariffs,” Trump wrote in the letter, which has since made its way into public circulation.

Trump noted that the 35% levy was still “far less than what is needed” to close the trade gap between the two countries, arguing that Bangladesh’s longstanding trade practices had led to an “unsustainable” deficit for the US. He further warned that any retaliatory tariff move by Dhaka would prompt the US to impose additional duties in proportion.

In his communication, the US President accused Bangladesh of maintaining restrictive tariff and non-tariff barriers, which he claimed undermined American competitiveness. However, he left the door open for a potential revision of the new tariff if Bangladesh agreed to open its markets more freely to US goods.

Bangladesh currently holds a 9% share in the US ready-made garments (RMG) market, behind Vietnam, which leads with a 19% share. With higher tariffs now in place, analysts believe India could stand to benefit as global buyers consider alternative sourcing destinations to avoid additional costs.

In addition to Bangladesh, the US has imposed 25% tariffs on imports from Japan and South Korea. Twelve other countries have reportedly received notices outlining revised trade duties. Meanwhile, Trump has hinted that a trade deal with India is “very close,” raising hopes of smoother access for Indian goods into the American market.

Market participants are now watching closely to see how global apparel supply chains adjust to the new tariff regime and whether Indian manufacturers can quickly scale up to capture a larger export share.

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