Abdur RahimThe United States’ sudden 90-day pause on global tariffs—announced by President Trump amid economic turbulence—offers a strategic breathing space for exporters across South Asia. As Washington scales back tariffs to 10% for most countries (excluding China, which now faces a crushing 125% levy), a window has opened for supply chain diversification. U.S. importers, weary of depending on China amid escalating trade tensions, may increasingly look toward South Asia to fill the vacuum. But are South Asian nations prepared for this shift?
Export Opportunities and Strategic Timing
The current pause is not merely a relief—it may come out as a moment of realignment. With global manufacturers actively rethinking their sourcing strategies, South Asian countries have a rare chance to step into markets where Chinese dominance once reigned. This could range from apparel and electronics to pharmaceuticals and agriculture. But readiness varies widely across the region.
India:
India stands out as the most prepared South Asian country to capitalize on this moment. With a robust industrial base, ongoing “Make in India” initiatives, and generous production-linked incentive (PLI) schemes, India has the capacity and policy infrastructure to absorb displaced supply chains.
Recent trade agreements and improving port infrastructure strengthen its appeal. While bureaucratic red tape and slow customs processes persist, reforms are underway to streamline operations. India’s growing partnerships with the U.S. further bolster its strategic position.
Bangladesh:
Bangladesh, the world’s second-largest apparel exporter after China, is well-poised to benefit in the textiles and garment sectors. The country offers competitive labor costs and has made strides in factory compliance and sustainability. The U.S. is already a key market for Bangladeshi garments, and a tariff reduction could significantly boost volumes. However, overreliance on one sector remains a challenge. Infrastructure limitations and energy reliability also need urgent attention for broader export diversification.
Pakistan:
Pakistan has long had potential in textiles, IT services, and agriculture, with access to Chinese logistics through the China-Pakistan Economic Corridor (CPEC). However, persistent political instability, currency volatility, and energy shortages have hampered its trade readiness. Although cost advantages are present, Pakistan’s ability to respond quickly to changing global trade dynamics remains limited.
Sri Lanka and others:
Sri Lanka is empowered with excellent port facilities and niche exports like tea, garments, and rubber. Yet the nation is still recovering from a severe economic crisis. Structural issues—like debt overhang, inflation, and reduced investor confidence—dampen its prospects in the short term.
Countries like Nepal and Bhutan lack industrial scale and export infrastructure to participate meaningfully in this realignment.
The 90-day tariff pause is more than a diplomatic overture—it might be a geopolitical reset for global trade. While the clock ticks, South Asia must assess and act. India and Bangladesh have a unique chance to rise as alternative hubs. For others, the path requires deep structural reforms, investment in infrastructure, and long-term strategic planning. As the U.S. and China continue their trade duel, the world will be watching to see whether South Asia can rise not just as an alternative—but as a formidable player in its own right.
