Future-proofing textile exports
The trade landscape in August 2025 resembles a high-stakes poker game, where nations are forced to recalibrate strategies amid escalating US tariffs. Islamabad's newly signed trade deal with Washington alone has shifted trade balances in South Asia significantly.
The US imposed a 19% tariff on Pakistani goods, a 20% tariff on Bangladeshi ones, and a devastating 25% (potentially 50%) on Indian products. This creates two entirely different competitive dynamics: a golden opportunity against India and cut-throat competition against Bangladesh. This affects our textile exports directly.
In January 2025, Pakistan had a 5% advantage over Bangladesh in its textile exports to the US, but now that comfortable lead has evaporated overnight. It now clings to a razor-thin one-percentage-point edge (19% vs 20%), while Bangladesh's massive manufacturing machine enjoys at least 60% lower power and gas tariffs compared to Pakistan.
Meanwhile, the Indian tariffs open new doors of opportunities for Pakistan. With a six-point tariff advantage already, Pakistani exporters can undercut Indian suppliers across textiles, processed foods, leather goods, and IT services. In fact, India's textile exports to the US fell for the fourth consecutive month in July, and India's $10 billion annual textile exports to America now sit vulnerable, ripe for capture. Major US buyers like Target and Walmart are already reassessing supplier relationships, with Pakistani manufacturers reporting unprecedented inquiry volumes.
In contrast, Bangladesh's resurgence threatens to crush Pakistan's textile dominance before it can capitalise on the Indian opportunity. Bangladesh's garment sector employs 4.1 million workers – nearly triple Pakistan's textile workforce. Bangladesh exported $47 billion in garments alone globally last year compared to Pakistan's $16 billion total exports across all sectors.
Even with a 1% tariff disadvantage, Bangladesh's scale advantages in logistics, financing, and established buyer relationships with major US fashion brands could overwhelm Pakistan's narrow price edge.
Moreover, Bangladesh's textile lobbies are pressuring Dhaka to negotiate even lower US tariff rates, while Pakistani manufacturers demand government subsidies to offset the narrowed competitive gap. Indian suppliers, desperate to maintain US market access despite punitive tariffs, are slashing prices and accepting razor-thin margins.
American importers are watching this South Asian battle with keen interest. The fragmented competitive landscape gives US buyers unprecedented leverage to demand lower prices, faster delivery, and higher quality from all three countries desperate to maintain market shares.
Global fashion brands are reshuffling supply chains after years of China-focused sourcing. This once-in-a-decade opportunity to capture massive new market share could slip away if Pakistan fails to act decisively against both competitors simultaneously.
Way forward: the three-front war strategy
Pakistan must fight simultaneously on three fronts to survive this transformed landscape. Against Bangladesh, Pakistan cannot win on price or scale. Instead, it must pursue "premium differentiation" — positioning itself as the quality alternative to Bangladesh's mass-market approach. This means investing in sustainable manufacturing, technical textiles, fashion design partnerships, and Industry 4.0 technologies that Bangladesh's fragmented sector cannot match. Slashing margins to maintain competitiveness won't work with Bangladesh's volume-focused approach.
Against India, Pakistan should launch immediate and aggressive campaigns targeting US importers currently sourcing from Indian suppliers, emphasising the 6% (and potentially 31%) cost advantage while it lasts. Pakistani exporters should offer locked-in pricing and guaranteed capacity to steal Indian contracts before competitors respond.
The third front is diversification. Pakistan's over-dependence on textiles becomes a vulnerability when Bangladesh has developed textiles as its core competency. Pakistani exporters must rapidly expand into pharmaceuticals, IT services, processed foods, and light manufacturing sectors where the country's skilled workforce and growing industrial base should compete with India.
The window for action is closing fast. Bangladesh won't remain satisfied with a 1% tariff disadvantage, while India's powerful lobbying machine will fight to level the playing field. Pakistan's moment of tariff advantage could vanish within months if it doesn't use the opportunity to increase its competitiveness in the long run.
THE WRITER IS A CAMBRIDGE GRADUATE AND IS WORKING AS A STRATEGY CONSULTANT
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