The apparel industry in Sri Lanka is going through hard times. The recent tariffs on steel and aluminum, as enacted by the Trump administration, are finally starting to take their toll. The United States has historically applied tariffs as high as 20% on all apparel imports. This will effectively kill any chance the move had of protecting Sri Lanka’s garment sector from serious harm. Uniqlo and Adidas have both signaled impending price increases in the US now. They seek to balance out the higher expenses resulting from these tariffs.
The tariffs are misdirected, targeting Asian garment exports. As a consequence, manufacturers in Sri Lanka, Bangladesh, and China are panicking. Sri Lanka’s government is now concerned about lasting damage to its economy. In addition, many local businesses are likely to be affected, as these communities would greatly rely on apparel exports to the United States.
In another notable development, South Korea is re-evaluating its participation in the CPTPP. This decision follows as a tactical response to the US tariffs. This move reflects a broader trend among Asian countries to seek alternative trade agreements that could mitigate the adverse effects of US tariffs.
Yet Chinese manufacturers — many of whom produce for global brands like Nike and Uniqlo — are starting to speak out. Even as they continue to post record profits, they continue to plead that continued 232 tariffs will eventually affect their pricing practices and their bottom line. So far, many of these producers have been forced to look at diversification into other markets to relieve some of the burden of dependency on US exports.
Brazil is already hard at work on strengthening its coffee export relationship with China. This decision coincides with growing tariff pressures from the United States on the country. This change is representative of an increasing trend behind the scenes, where countries start to shift their trading strategies to accommodate for tariff imbalances.
A recent wave of customs policy changes enacted by the former Trump administration have further added to these frictional trade conditions. As a consequence, postal services throughout Asia have halted shipments to the US. These changes have resulted in confusion and real doom-loop delays for thousands of exporters waiting on the letter.
US cotton exports to China have tanked in the first half of this year. Besides China, exports to other Asian markets have skyrocketed. This change indicates that apparel production is more and more moving to countries that are insulated from the impact of US tariffs. Our toughest critics In many ways, our harshest critics are Bangladesh’s garment makers themselves. Companies are already using them to travel around tariffs by sourcing from other places.
Container volumes from Asia to Europe have spiked to all-time highs. This increase is almost entirely due to an explosion in trade coming from China. This trend is a key indicator of how firms are shifting around their supply chains to solve tariff-induced issues and seize opportunities.