Although the key apparel sourcing countries of Bangladesh, Cambodia, Sri Lanka and Thailand won a reprieve with the steep drop in the imposed tariff numbers in president Trump’s missive close to midnight on Thursday, manufacturers from the region largely reacted Friday with a cautious, “Lets wait and watch” attitude.
Thailand and Cambodia were both assigned a 19 percent tariff—down sharply from the original April rates of 46 and 47 percent, respectively—putting them on par with Indonesia’s revised rate announced in July.
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Among the other countries down to 19 percent are Pakistan, Philippines and Malaysia.
Bangladesh and Sri Lanka now face 20 percent, down from the earlier 37 percent and 47 percent and now comparable to that for Vietnam’s 20 percent announced in July.
The greatest relief manufacturers in sourcing countries from Cambodia to Thailand, Bangladesh to Sri Lanka told Sourcing Journal was that with this new reset on tariffs “it was perhaps a relatively level playing field after all.”
President Trump announced an extra week for the tariffs to go into effect, on August 7. Regional analysts echoed the cautious optimism suggesting that “negotiations weren’t quite done yet” and there might still be room to bring the rates lower.
For many in countries like Bangladesh and Cambodia, there was a sense of deep relief that factory shutdowns and mass job losses might now be averted.
“We’re relieved for the time being—because our tariff, and those for competing countries, is now similar, and in some cases lower. It would have been better if it was 15 percent, though,” Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told Sourcing Journal.
He added that buyers had begun reviving frozen orders, eager to restock ahead of the coming season. “They don’t want their racks empty.”
Home to a $40 billion apparel export sector, Bangladesh’s garment industry contributes more than 80 percent of the country’s total export earnings, employing around 4 million workers.
Asked if negotiations would go on in the coming days, he observed, “We have to continue—maybe not in a formal sense but we have to continue working towards it. At this time, we are congratulating our government and those in the frontline for negotiating, and we have also been involved behind the scenes. We would like to focus on business now—it doesn’t depend only on tariff—there are a lot of things that affect business—gas prices, interest rates, labor laws, law and order and the political situation—tariff is only one component.”
Economists have begun weighing the long-term implications of the new tariff landscape.
Mustafizur Rahman, distinguished Fellow at the Centre for Policy Dialogue (CPD), a leading think tank in South Asia in Dhaka observed, “One way to look at it is that the tariff for Bangladesh is down from 35 percent to 20 percent. But it’s still an additional cost burden. The relief for Bangladesh is that it is at least on par with Vietnam. From a competitive standpoint, that levels things.”
However, he cautioned that trade-offs remain unclear. “We know what we’ve received, but due to a non-disclosure clause, we don’t yet know what we’ve given in return. While the apparel sector will benefit, it is important to know how the country itself will fare.”
According to media reports, Bangladesh is expected to buy 25 Boeing aircrafts, increase wheat imports from the U.S., and amend labor laws by reducing the threshold for workers to form unions—from 30 percent to 20 percent.
These developments have offered some reassurance following industry concerns raised after the 2025 Fashion Industry Benchmarking Study released by the U.S Fashion Industry Association (USFIA) earlier this week, which indicated that U.S. fashion executives plan to increase sourcing from Indonesia, India and Cambodia over the next two years, driving by a desire to diversify and mitigate risks.
With India still facing 25 percent tariffs, down only by 1 percent from the earlier announcement of 26 percent – the rest of the region appears to be at an advantage.
Ken Loo, secretary general of Cambodia’s Textile, Apparel, Footwear and Travel Goods Association (TAFTAC), echoed regional sentiment. “We’re glad the rate has come down,” he said.
“We have no idea how this will impact buyers sourcing decisions and consumers yet. Everyone is adopting a wait-and-see approach. It is fortunate that we are all in the same ballpark. We will continue to work with the government to introduce measures that will reduce the cost of doing business and improve our competitiveness,” he added.
Emerald Am, chairperson of the European Chamber of Commerce in Cambodia Garment and Manufacturing Committee said that the new rate restored the confidence and signaled a step toward renewed bilateral cooperation for manufacturers, giving them breathing room and an opportunity for brands to reinvest in Cambodian supply chains.
According to media reports Cambodia will buy Boeing 737 Max aircrafts along with eliminating import tariffs, bringing them to zero. Sun Chanthol, deputy prime minister also observed that Cambodia agreed on improving labor standards and import inspection systems and U.S. concerns over non tariff barriers.
Sri Lankan manufacturers likewise expressed relief at the 20 percent rate, with the Joint Apparel Association Forum (JAAF) stating it “preserved the competitiveness of Sri Lanka’s apparel industry in the key U.S. markets.” Roughly 40 percent of Sri Lanka’s $4.8 billion apparel exports go to the United States.
Meanwhile, government heads across the region have been much more vocal about the impact of the reduced tariffs, congratulating themselves, and claiming success.
Muhammad Yunus, head of Bangladesh’s interim government, described it a “decisive diplomatic victory.” Malaysian trade and industry minister Zafrul Abdul Aziz said, “This decision by the United States reflects the strong and enduring economic ties between our two nations.”
Cambodian prime minister Hun Manet described it as a “a great victory for Cambodia. This is great news for the people and the economy of Cambodia to continue to develop our nation,” he noted, referring to his phone call with President Trump last week. “He told me that will make Cambodia happy (will make you happy). Today, his excellency decided to reduce the tax rate on goods imported from Cambodia to the United States to 19 percent”.
Others also noted the reduction in tariffs to be “a sign of friendship and partnership.”
“The announcement of the 19 percent tariff rate reflects the strong friendship and close partnership between Thailand and the United States. It helps maintain Thailand’s competitiveness on the global stage, boosts investor confidence, and opens the door to economic growth, increased income, and new opportunities for the country,’’ Thailand’s deputy prime minister and finance minister Pichai Chunhavajira noted in a post on Friday. “The outcome of this negotiation signals that Thailand must accelerate its adaptation and move forward in building a stable and resilient economy, ready to face global challenges ahead,” he said.
The sticking point for much of the region remains the issue of transshipment of goods, with its 40 percent levy—with much of the region intrinsically dependent on China in a variety of ways, how this point will be interpreted—and enforced—remains unclear, as do the final levy of tariffs on China which are still under discussion.
“There are many more unanswered questions,” said one Cambodian manufacturer, speaking anonymously. “Will this change again in one week?”
He admitted that many in the industry remained confused. “But in a way, it feels like a reset button. We’re all back in the same game again—and that’s a relief.”
