KPR Mill, Vardhaman, Welspun Living, To Trident: Why Textile Stocks Are Falling Today Post US-Bangladesh Deal?

US-Bangladesh Deal: KPR Mill, Vardhaman, Welspun Living To Trident, a number of textile stocks crashed during Tuesday's trading session, hours after the United States and Bangladesh finalised a trade deal.

KPR Mill shares were down 2.85%, Vardhman Textiles shares were down 4.92%, Welspun Living shares were down close to 2%, and Trident shares were down 3% during Tuesday's trading session.

Why Textile Stocks Are Down Today?

Decline in textile stocks came after the finalisation of US-Bangladesh trade deal. As per the deal, Bangladesh goods will secure a reduced 19% US tariff under a trade agreement signed between the two countries.

US-Bangladesh Trade Deal

As part of the US-Bangladesh agreement, US has assured to build a mechanism to allow zero reciprocal tariffs on certain textile and apparel goods from Bangladesh. The US is likely to give exemptions to made in Bangladesh textiles and garments that are manufactured with US material.

Muhammad Yunus, chief advisor heading Bangladesh's interim government, said Washington had "committed to establishing a mechanism for certain textile and apparel goods from Bangladesh using U.S.-produced cotton and man-made fiber to receive zero reciprocal tariff in (the) U.S. market," reported Reuters.

Yunus said the agreement followed nine months of negotiations that began in April last year.The South Asian nation in August had secured a reduction in U.S. tariffs on its exports to 20%, down from 37% initially proposed by Washington, offering much-needed relief to the nation's apparel exporters.

India-US Trade Deal

Textile stocks witnessed a sharp sell-off after a brief surge in valuations following the finalisation of the India-US trade deal. Despite initial optimism, the agreement imposes an 18% tax on Indian textile exports, dampening investor sentiment. With this development, textile products from Bangladesh are once again expected to enjoy a competitive edge over Indian imports in the US market.

India-US trade deal was finalised after India agreed to stop buying oil from Russia. As part of the deal, India is also supposed to reduce their tariffs and non tariffs barriers against the United States, added Trump in his post, while highlighting that India also committed to "Buy American" at a much higher level.Trump stated that New Delhi will purchase over $500 billion worth of US exports under the understanding. The list includes US energy, technology, agricultural products, coal and other goods.

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