Bangladesh set to benefit as US tariffs reshape cotton jersey trade

Table 1: Top 5 Exporters and Trade Statistics in 2024—Cotton Jerseys and Pullovers (HS-611020)

Source: TradeMap and F2F Analysis * Effective from 4^th March 2025

Note: RCA - Revealed Comparative Advantage; UVR - Unit Value Realisation; LPI - Logistic Performance Index

Figure 1: Top 5 Exporters and Trade Statistics in CY 2024—Cotton Jerseys and Pullovers (HS-611020)

Vietnam – Leader but weak competitiveness

Vietnam is the leading exporter of cotton jerseys and pullovers, holding a strong comparative advantage with an RCA of 4.48. However, its UVR falls within the mid-range category, making its products accessible to a broad consumer base. Despite this, Vietnam’s relatively higher UVR could pose a challenge, especially given the availability of lower-priced cotton jerseys from competitors like Bangladesh and China. Vietnam does not benefit from preferential tariff treatment, as cotton jerseys are largely subject to Most Favoured Nation (MFN) tariffs in key importing countries. Vietnam’s high UVR would prove to be disadvantageous given the availability of lower-priced cotton jerseys from both Bangladesh and China.

China – Tariffs threaten cost-effectiveness

Despite being the second-largest exporter of cotton jerseys and pullovers, China has the lowest UVR of $10.54/kg and a modest RCA of 1.02. Its low UVR highlights China’s strong position as a leading supplier of affordable cotton jerseys, driven by its large-scale production capabilities and economies of scale.

With the first tariff imposition on February 4th, 2025, China’s tariff rate increased to 15 per cent. This increase in tariff burden would cause the UVR to rise as production and export costs escalate. As a result, China’s UVR would likely increase to around $11.59/kg, reflecting the growing challenges posed by the higher tariffs. The increase in the UVR indicates that China’s traditional low-cost advantage is being eroded, making its synthetic trousers less attractive to price-sensitive consumers.

Source: F2F Analysis

In the second tariff imposition, effective from March 4th, 2025, China’s tariff rate rose even further to 25 per cent. This significant rise would push China’s UVR to $12.65/kg or higher. However, this higher tariff burden will not greatly impact China’s ability to provide affordable products simply due to its lower UVR values even after full tariff imposition.

Cambodia – High comparative advantage

Cambodia stands to be one of the key beneficiaries of the additional tariffs imposed on Chinese exports by the US. While Cambodia’s UVR is comparable to that of Vietnam, its significantly higher RCA positions it favourably within the global cotton jersey and pullover market. This strong RCA suggests that Cambodia has a specialised and competitive edge in this sub-category, allowing its textile industry to capitalise on shifting trade dynamics. With rising costs and trade restrictions affecting China, Cambodia is likely to intensify its focus on expanding production and exports in this segment, leveraging its cost advantages and preferential trade agreements to strengthen its market presence.

Bangladesh – Likely winner with most cost-effective products

Bangladesh is poised to be the biggest beneficiary in this shifting trade landscape due to US tariff impositions, boasting the highest RCA of 27.36 and the lowest UVR at $14.86/kg. This indicates that Bangladesh has a strong specialisation in cotton jersey and pullover exports, allowing it to produce and sell at significantly lower prices than most competitors.

With its competitive pricing strategy, Bangladesh primarily faces competition from China, which is set to be impacted by additional tariffs. As a result, Bangladesh is likely to gain further market share as global buyers seek cost-effective sourcing alternatives. Its well-established textile infrastructure, duty-free access to key markets through various trade agreements, and a highly skilled labour force further reinforce its position as a dominant player in the cotton jersey segment.

Indonesia -- Potential marred by high UVR

Despite maintaining a strong RCA of 7.1, Indonesia faces a significant challenge due to its high UVR. Each kilogram of its cotton jerseys is priced approximately 1.9 times higher than those from China, making it less competitive in price-sensitive markets.

This higher UVR suggests that Indonesia’s production costs, possibly influenced by higher labour wages, raw material expenses, or lower economies of scale, are driving up export prices. As a result, Indonesia may struggle to compete with low-cost suppliers like China and Bangladesh, especially in mass-market segments. However, this premium pricing could also indicate a focus on higher-value or niche markets where quality, sustainability, or branding play a critical role. To strengthen its position, Indonesia may need to explore strategies such as cost optimisation, trade agreements, or product differentiation to offset its pricing disadvantage.

Future outlook

Bangladesh is poised to be a major winner in the US cotton jersey and pullover market, benefiting from its low UVR of $14.86/kg and high RCA of 27.36. With the additional tariffs imposed on China, Bangladesh’s cost-effective pricing strategy will position it as a strong alternative for US buyers seeking affordable cotton jerseys. The country’s highly competitive pricing, bolstered by its duty-free access to key markets through various trade agreements, allows Bangladesh to offer more attractive pricing compared to its competitors. Given its growing textile infrastructure and skilled labour force, Bangladesh is expected to capture a larger share of the market, especially in price-sensitive segments, making it the dominant player moving forward.

Despite the 25 per cent tariff imposed on China, its lower UVR of $12.65/kg will help it maintain a competitive edge, particularly in price-sensitive markets. While the higher tariffs increase costs, China’s large-scale production capacity and economies of scale will offset much of the impact. This ensures that its synthetic products remain in the lower price segment compared to competitors. As a result, China is likely to retain its position as a leading exporter of cotton jerseys and pullovers, even as cost-sensitive buyers shift some demand to competitors like Bangladesh.

Fibre2Fashion News Desk (NS)