US tariffs to intensify competition in European markets?

As implications of US tariffs under President Donald Trump’s trade regime slowly begin to materialise, an increasing number of apparel manufacturers and exporters—hit hard by the steep duties—are seeking to diversify markets for some relief.

With the US becoming increasingly cost-prohibitive due to additional levies, the European Union (EU) and the United Kingdom (UK) have emerged as key focus areas for exporters aiming for both respite and growth.

Several Indian exporters have acknowledged that the latest round of US tariffs is simply too high for firms to absorb. “There is little choice but to go for urgent diversification,” an Indian apparel exporter told Fibre2Fashion, urging swift industry action.

Textiles Minister Giriraj Singh also reportedly echoed this urgency in a recent meeting with industry stakeholders. He emphasised the importance of expanding India’s textile export footprint. Pointing to the European Union’s vast import capacity, he reportedly urged Indian exporters to actively explore opportunities across the EU bloc.

Meanwhile, with the signing of the Comprehensive Economic Trade Agreement (CETA) with the UK, Indian textile and apparel exporters are poised to benefit significantly in the British market. Once implemented, the agreement will provide zero-duty access for 99 per cent of Indian exports to the UK, covering over 1,140 key textile and apparel products.

This preferential access is expected to give Indian exporters a critical competitive advantage in the UK.

Dr. A. Sakthivel, Honorary Chairman of the Tiruppur Exporters’ Association and Vice Chairman of the Apparel Export Promotion Council (AEPC) highlighted the potential gains from this agreement. Speaking to Fibre2Fashion earlier, he noted that with lower trade barriers, Indian exports are expected to become more competitive in the UK compared to key competitors like Bangladesh, Vietnam, and China.

There is still some time before exporters begin to enjoy the CETA benefits.

However, India’s pivot to Europe is unlikely to go uncontested. China is also expected to intensify efforts to expand its footprint in the European markets, especially if US tariffs on Chinese goods remain in place, at least so believes many experts.

It may be mentioned here that US President Donald Trump has signed an executive order delaying the reimposition of high US tariffs on Chinese goods for another 90 days.

Meanwhile, in Bangladesh, a sense of unease is also growing in anticipation of the increased competition in these key markets in the days to come. The EU and UK are critical apparel export destinations for the country, and several Bangladeshi industry players Fibre2Fashion spoke to underlined that there are concerns about increased competition from India and China.

“As the US market shrinks for China and India, they will pivot to Europe to sustain exports. This could drive prices down and impact Bangladesh’s competitiveness,” warned a Bangladeshi apparel exporter, a concern which was echoed by many others within the Bangladesh apparel industry.

Even though Bangladesh currently enjoys duty benefits in the European Union under its Everything but Arms (EBA) regime, the upcoming LDC graduation will strip the country of the preferential trade benefit that it currently enjoys.

Meanwhile, although Bangladesh may gain from lower US tariffs in the short term, exporters remain cautious. Over 50 per cent of the country’s apparel exports currently head to Europe, compared to less than 20 per cent to the US, as per some estimates. They believe conceding any ground in European markets could prove to be a very costly for Bangladesh eventually.

Vietnam, meanwhile, seems to be in a better position. The EU-Vietnam Free Trade Agreement (EVFTA) grants Vietnamese exporters significant advantages. 

There is one point, nonetheless, on which experts and industry players from different regions agree: if the current US tariff environment persists, Europe will turn into a high-stakes battleground as American protectionism reshapes the trade dynamics and export landscape.

ALCHEMPro News Desk (DR)