On April 4, 2025, shares of Pearl Global Industries Ltd., a prominent manufacturer and exporter of ready-made garments, plummeted by as much as 18%, extending a decline that began the previous day when the stock fell over 7%. This significant drop came in the wake of U.S. President Donald Trump's announcement on April 3 regarding reciprocal tariffs affecting around 60 countries, including key manufacturing hubs like China, Vietnam, and Indonesia.
The tariffs imposed by the U.S. are particularly detrimental to Pearl Global, which operates 16 factories across Bangladesh, Vietnam, and Indonesia. These countries are now facing higher tariffs compared to India, where Pearl Global also has seven manufacturing facilities. Specifically, the company has nine factories in Bangladesh, five in Vietnam, and two in Indonesia. The management of Pearl Global indicated during their December quarter earnings call that their order book share from U.S.-based customers compared to non-U.S.-based customers is trending towards 65-35.
Brokerage firm Prabhudas Lilladher noted that Pearl Global seems to be adversely impacted due to its manufacturing presence in Bangladesh and Vietnam, while competitors like KPR Mill appear to be more insulated from the fallout. As of the end of the December quarter, the promoters of Pearl Global held a 62.82% stake in the company, while mutual funds accounted for 10.59%, with notable stakes held by Tata Multicap Fund, HSBC MF, ICICI Prudential MF, and HDFC MF. Among foreign institutions, Goldman Sachs owned a 2.77% stake, and retail investors held an 8.44% stake, with investor Mukul Agrawal owning 2.61%.
Currently, shares of Pearl Global are trading at ₹1,058, reflecting a staggering 40% decrease from its peak of ₹1,717. In contrast, Indian apparel companies such as Gokaldas Exports, Vardhman Textiles, and KPR Mill outperformed on April 3, not due to exemption from tariffs but because the reciprocal tariffs imposed on India at 26% are significantly lower than those on China, Vietnam, or Indonesia, thereby providing India with a competitive edge.
Meanwhile, across the Atlantic, the French cosmetics industry is feeling the pressure of a trade war sparked by the U.S. administration's decision to introduce an additional 20% customs duty on imports from the European Union. According to the French cosmetics trade association FEBEA, in 2024, France exported 40% of its cosmetics and personal care products to other European countries, amounting to around €10 billion.
"Our know-how, which cannot be relocated, remains a major asset," a spokesperson for FEBEA stated. They expressed disappointment over the U.S. tariffs, emphasizing that the U.S. constitutes 13% of the French cosmetics sector's exports. The spokesperson noted that the trade war could lead to adverse effects for both American consumers, who may face higher prices and reduced supply, and European companies, which could see diminished competitiveness and lower margins.
"A trade war only has losers," the spokesperson added, cautioning that this escalating situation could create competitive pressure on other global markets, affecting not just European firms but also competitors in South Korea, Japan, and China.
In a related development, Didier Fauchard, president of Medef Reunionnais, expressed shock over the tariffs imposed on La Réunion, a French overseas region, which now faces a staggering 37% tariff from the U.S. Fauchard lamented the geographical oversight, suggesting that there may have been a mix-up with Madagascar. He highlighted that La Réunion, home to 865,000 residents and 35,000 businesses, is particularly vulnerable, especially those exporting products like rum, vanilla, and Patagonian toothfish to the U.S.
Fauchard emphasized the immediate threat these tariffs pose to small and medium enterprises (SMEs) that export to the U.S., stating that their survival is at risk due to the financial burden of these tariffs. In 2023, La Réunion exported nearly €400 million worth of goods to the U.S., with fishing expected to be the most affected sector, particularly high-end products like the Patagonian toothfish and lobster.
As a response to the tariffs, Fauchard noted that La Réunion is recalibrating its export markets, aiming to reduce dependency on distant countries, including the U.S. He pointed out that this strategic shift is part of a broader sovereignty initiative to enhance local commerce.
The implications of Trump's latest tariff measures extend beyond the cosmetics and garment industries. American consumers are expected to feel the pinch as the average tax rate on imported products is projected to rise to nearly 20%, a significant increase from the 2.3% rate in 2024. Adam Turnquist, an analyst at LPL Financial, warned that such high tariffs could lead to inflation and potentially a recession, as companies struggle to absorb the additional costs.
Turnquist highlighted that the tariffs, which range from 10% for all imports to 54% cumulatively for products from China, have not been seen since the 1930s, a period that contributed to the Great Depression. The burden of these tariffs is typically passed on to consumers, who are already grappling with rising living costs post-pandemic.
In light of these developments, the French dairy sector is also bracing for impact. In 2024, France exported €342 million worth of dairy products to the U.S., making it the country's third-largest client outside the EU. The president of the CNiel (Centre National Interprofessionnel de l'Economie Laitière) noted that the primary risk lies in the potential imbalance of dairy markets, with significant quantities of cheese and milk at stake if market shares are lost.
Emmanuel Macron has urged French companies to freeze their investments in the U.S. until further clarifications are provided by the Trump administration. The objective is to formulate a European response that addresses the situation without escalating tensions further.
As the global trade landscape continues to shift dramatically, businesses and consumers alike are left to navigate the uncertain waters of international tariffs and trade relations, with the potential for significant economic repercussions looming on the horizon.
