On 31st July, textile stocks fell precipitously as a result of US President Donald Trump’s announcement of a 25% tariff on Indian exports that would take effect on 1st August and be accompanied by an additional penalty.
Following Trump’s threat of tariffs and penalties, textile firms including Welspun Living (6.51%), Indo Count Industries (7.44%), Vardhman Textiles (4.57%), Gokaldas Exports (8%), Pearl Global (10.64%), and KPR Mills (5.14%) saw losses ranging from 4% to 11%.
Since the US accounts for approximately 70% of Gokaldas Exports’ and Welspun Living’s income, these businesses, which are highly dependent on the US market, face difficulties.
Shares of Trident and Vedant Fashions fell 3% and 4.73%, respectively, reflecting the impact on the larger stock market. Shares of Raymond Lifestyle and Arvind Ltd. fell 1.3% and 3%, respectively. Analysts point out that these tariffs can have a short-term detrimental impact on GDP growth and exports.
Bangladesh and Vietnam are two nations that fiercely compete with India in the garment export market. Vietnam has negotiated a 20% tariff with the US, whereas Bangladesh is subject to a 35% tax. Negotiations are scheduled to restart in mid-August, and it is anticipated that the recently imposed tariffs on Indian imports may spark new discussions.
Until further information about the ongoing trade negotiations becomes available, the market will continue to be volatile. With the potential for enormous economic effects, the stakes are high for both nations concerned.
