The return of bilateral tariff letters
In July ****, Trump issued tariff letters to ** countries, setting new reciprocal rates effective August *. Bangladesh received a ** per cent rate, down from the ** per cent proposed in April. Bosnia and Algeria were assigned ** per cent, while Cambodia’s rate fell from ** per cent to ** per cent. Vietnam secured a separate ** per cent agreement. Those announced rates served primarily as negotiating anchors rather than final tariff outcomes. Bangladesh completed seven rounds of negotiations before securing a ** per cent tariff by August *, while Sri Lanka reduced its rate from ** per cent to ** per cent by August *. The letters established the opening position; negotiations ultimately determined the final tariff rates.
That framework changed on February **, ****, when the US Supreme Court ruled *–* that the International Emergency Economic Powers Act (IEEPA) did not authorise these tariffs. The same day, the White House invoked Section *** of the Trade Act of ****, imposing a temporary ** per cent tariff pending a replacement framework. Section *** is limited to *** days, placing its expiry on July **. Meanwhile, USTR’s Section *** investigations covering ** countries for structural excess capacity and ** countries for forced-labour practices remain in the public comment stage.
What the trade data now shows
TexPro data through Q* **** gives a clean read on the post-letter sourcing map. Combined US knit and woven apparel imports (HS ** and HS **) from Vietnam reached $**.* billion on a trailing four-quarter basis, up *.* per cent year-on-year. Vietnam alone captured **.* per cent of Q* **** apparel volume from the six letter-recipient countries. Cambodia posted the strongest growth trailing four-quarter imports climbed **.* per cent to $*.* billion, driven by a Q* **** surge to $*.** billion. Bangladesh held firm at $*.* billion, up *.* per cent. Sri Lanka stayed flat at $*.* billion.
The latest quarterly data, however, suggest that the initial sourcing gains are moderating. Bangladesh’s apparel exports to the US declined *.* per cent year on year to $*.** billion in Q* ****. Cambodia’s momentum also eased, with imports falling **.* per cent from Q* ****, while Vietnam’s quarterly growth slowed to *.* per cent. Buyers appear to have absorbed the first round of tariff adjustments, with sourcing volumes stabilising under the new cost structure.
Why sourcing performance diverged
Countries that signed reciprocal trade agreements, including Bangladesh in February ****, along with Cambodia, Malaysia and Pakistan, now fall within the ** per cent tier of USTR’s proposed Section *** forced-labour framework. Sri Lanka and Vietnam, which have yet to secure comparable agreements, face a default tariff of **.* per cent. Although the difference is only *.* per cent points, it carries significant weight in an industry where margins are exceptionally thin. Cambodia’s **.* per cent import growth compared with Sri Lanka’s flat performance illustrates how negotiated tariff outcomes translated into stronger sourcing competitiveness.
Strategic implications for brands
For sourcing executives, the critical question is what follows after July **. If Section *** expires before a Section *** framework is implemented, tariff exposure will become increasingly dependent on bilateral agreements. Countries with reciprocal trade agreements enjoy greater tariff certainty, while those without them remain exposed to future tariff revisions, increasing landed-cost uncertainty. Based on TexPro’s trailing four-quarter import data, a *.*-per cent-point tariff differential across Bangladesh’s $*.* billion apparel exports represents roughly $*** million in annual landed-cost variance. Applied to Vietnam’s $**.* billion apparel trade, the same differential approaches $*** million.
Outlook
The immediate risk is a repeat of the policy uncertainty seen during July and August ****. Countries that are yet to secure reciprocal agreements, most notably Sri Lanka, are likely to pursue last-minute bilateral negotiations before Section *** tariffs take effect. USTR has also proposed a textile-specific mechanism linking preferential tariff treatment to purchases of US cotton and man-made fibre, offering potential relief for exporters that increase US input sourcing. If Section *** implementation extends beyond the Section *** deadline, further bilateral tariff letters or negotiated side agreements are likely.
Strategic bottom line
The August *, **** reset established bilateral letters as a working trade-policy instrument. TexPro Q* **** data confirms the mechanism moved real sourcing volume. Vietnam extended its lead. Cambodia gained through the reciprocal-agreement track. Bangladesh held via aggressive negotiation. Sri Lanka lost ground for lack of a deal. With Section *** sunsetting and Section *** lagging, the same mechanism is likely to be redeployed within weeks. Brands should treat signed reciprocal trade agreements as the credible cost floor, prepare for another round of rate volatility through August, and price sourcing scenarios for a *.*-to-** per cent swing on countries without settled deals.
