When Donald Trump announced his new rate rules for more than 180 countries on April 2, which he described as a “liberation day”, he sent shock through the world commercial landscape.
Like other regions, South Asia, a region of more than 2.04 billion people, whose savings are based strongly on exports to the United States, will be deeply affected by Trump prices. Governments in the region will have to react quickly to ensure that their savings already in difficulty flows more.
The new prices for the countries of South Asia vary from 10% to 44%. A minimum rate of 10% will be imposed on all countries. In the case of countries with large American trade deficits, Trump has noted prices half of what the business partner has imposed on American imports, although the calculation formula has been challenged.
India, the greatest economy in the region, exported $ 77.5 billion in goods in 2024 dollars, with American average tariffs of less than 2%. Bangladesh, the second largest exporter in South Asia in the United States, had an average rate of around 15% on its goods. Exports of clothing from Bangladesh to the United States, mainly made up of ready-to-use clothing (RMG), increased by 0.75% in annual shift in 2024, reaching $ 7.5 billion.
Likewise, Pakistani, Sri Lankan and Nepalese goods imported to the United States have attracted modest rate rates, generally falling below 10%, according to product categories. These lower prices have given the region an advantage of prices on competitors in Southeast Asia, Latin America and parts of Africa.
However, under Trump’s new policy, India faces a tariff of 26% on its goods, while Bangladesh, Pakistan and Sri Lanka were slapped with 37%, 29% and 44% of prices, respectively. As for countries like Nepal, Bhutan, Maldives and Afghanistan, whose export volumes to the United States have been small, their goods will face a universal rate of 10%, which still means higher barriers than before.
These spectacular changes could affect economic stability in several of these countries, in particular since many of them are developing countries. In addition, pricing hikes come at a time when they are already struggling with inflation, political upheavals, unemployment of young people and post-comfortable recovery.
Bangladesh may be the most vulnerable. Its economy is deeply linked to its clothing sector, which employs more than 4.1 million workers, mainly women, and earns most of its foreign revenues from the US and EU markets. The United States is the largest market in Bangladesh. A price of 37% makes Bangladais products less competitive than those in countries like India or Vietnam.
Although the exact financial losses are not yet calculated, local exporters and professional associations have expressed great concern. Many fear that American buyers reduce future orders or are looking for cheaper alternatives elsewhere, which could affect jobs and factory wages. Bangladesh undergoes a political transition after the eviction of Sheikh Hasina on August 5 of last year. Consequently, it has experienced important social disorders, especially in the RMG sector (Readymade clothing). The workers were on strike on wages.
Indian goods are facing 26% tariff according to new Trump rules. It should have harmful effects on the Indian sector of precious stones and jewelry. The United States is a key market for this sector, representing nearly $ 10 billion or 30.4% of the country’s total annual exports in this category, worth $ 32 billion. The jewelry sector is preparing for a significant drop in exports due to American rates
The third export from India to the United States after engineering and electronic products, the gems and jewelry sector supports millions of jobs across the country. However, this sector has already been under pressure recently due to the low demand from China, overall exports decreasing by 14.5% to 32.3 billion dollars during the year 2023-24. Small exporters may not have the resources to absorb these new costs. Many Indian manufacturers are also recovering from global inflation and the depreciation of currencies, so that this commercial pressure could delay their recovery.
However, overall, the impact of India prices could be different from that of Bangladesh because it has a more diverse export basket which includes pharmaceutical products, jewelry, car parts, machines, RMG and electronics.
Despite the tariff burden, a new opportunity window could open up to India exports to the United States, because Trump’s pricing rate for India is relatively lower than the main competitors on the clothing market – Bangladesh, Sri Lanka, China (34%), Vietnam (46%) and Cambodia (49%). This creates a potential competitive window for the Indian RMG sector, which has long dragged behind Bangladesh and Vietnam on the American market. In 2024, India’s RMG exports to the United States amounted to around $ 4.2 billion, behind the $ 7.34 billion in Bangladesh.
Bangladesh and others losing the advantage of prices due to high prices under new rules, Indian manufacturers, in particular medium -scale exporters and on a large scale, can be positioned as a profitable and reliable alternative. India has already experienced an increase of 11.5% of RMG exports for the month of January 2025 compared to January 2024, when exports increased by 7.6% compared to January 2023. Thus, India can exploit the opportunity in the middle of this chaos.
The impact of the rise in prices could have a significant impact in Pakistan, because its economy is fragile and faces multiple crises, including high inflation, an increase in fuel costs, a rupe of depreciation and low exchange reserves. The textile industry is one of its rare solid sectors and earns a large part of its dollars from American exports. The 29% price will now disadvantage Pakistani exporters. Even a small drop in orders could cause job losses and economic instability in urban centers like Faisalabad and Karachi.
Sri Lanka, still rebuilt after its economic collapse of 2022, was slapped with the highest rate – 44% – in the region. Many of his clothing factories may also have trouble staying in business. The United States is the best market in Sri Lanka, representing more than 40% of total exports in the sector, which exceeded 5.5 billion US dollars in 2023. Even if Sri Lanka has had good relations with China and India in recent years, these countries cannot replace the demand of American buyers overnight. The risk of additional cancellations, layoffs and debt charges has now increased.
Small South Asian countries – Nepal, Bhutan, Maldives and Afghanistan – are also affected, but not as severely. These nations have lower export volumes in the United States, and the new 10% flat rate applies to all goods.
Exports from Maldives to the United States mainly include seafood. The impact of the 10% price will depend on the provision of American consumers to pay higher prices for Maldivian seafood or switching suppliers. For countries like Nepal and Bhutan, which export crafts, RMG, leather and tea in small quantities, concern is more on future commercial expansion.
Trump’s new pricing rules mean higher prices, a reduction in exports and possibly job losses in all industries. The RMG sector of Bangladesh, the various export sectors of India, and the textile poles of Pakistan and Sri Lanka are all threatened. While some countries can adapt over time through new markets or improve commercial transactions, the short -term impact could be painful. The region must now act quickly to protect its industries, workers and economic future.
However, all hope is not lost. While exporters of South Asia are now faced with steep prices, their main competitors in Southeast Asia and China have also been affected, some even more severely. Vietnam, for example, is now faced with a price of 46% on its exports to the United States, including electronics, textiles, shoes and furniture. Vietnam is the second largest RMG exporter to the American market. Cambodia, whose economy depends strongly on RMG, shoes and travel goods, faces an even higher rate of 49%. Indonesia has also been struck by a rate of 32% on the main categories such as clothing, electric machines, rubber and palm oil products. These sectors directly ride exports from South Asia, especially in clothing, shoes and consumer goods. This sharp increase in pricing charges at all levels reduces the competitive price difference which previously gave an advantage of the countries of Southeast Asia in Southern Asia.
American buyers, who are sensitive to cost increases, can now consider Southern Asian suppliers as just as or even more viable, in particular when considering the reliability, the workforce and the diversity of products.
This involuntary consequence could create an opening so that South Asia retains and even increases its market share if countries act quickly and strategically.
The RMG sector of Bangladesh still has a strong global position due to its time periods, low-cost labor and effective administration times. India, despite the current opposite winds, offers a wide mixture of exports ranging from pharmaceutical products and leather to engineering and jewelry, many of which compete directly with Indonesian, Chinese and Vietnamese exports. In addition, Sri Lanka and Pakistan, with their well -established textile infrastructure, remain important players if they are supported by favorable political changes or currency adjustments.
Although uncertainty is looming, the fact that global competitors are also pressed by these prices offers a relative moment of parity in South Asia – and with good coordination, this could be converted into resilience, retention and recovery.