This is being spoken in the present, and describes the present. Schindler's List, right? The "two days after" refers to the moment when this is said. If you use 'the law was passed", you're describing the past, not the present. This part of the line only marks "when", so you keep the tenses simple. The speaker is actually talking about the Polish tailors making the stars.

Okay. There are lots of situations where the past can be described in present tense, as if it were happening now. It's okay, but the writer must be consistent, no switching back and forth between present and past tenses.

What is missing that makes this sentence make sense is a comma. If the sentence begins with, "Two days after, (need this comma) a law is passed that people have to wear a star. Two days after something else occurs. It would be better to say, "Two days later, a law is passed..." The sentence is not written well. It would be more clear to say, "a law is passed requiring people to wear a star." A period needs to be added here and "The tailors" starts a new thought. This post is a good example of something that should go in a notebook for corrections.

Sorry, I made a mistake in 'law". "Two days after the law is passed that all people have to wear the star the tailors are turning them out by the gross in a variety of fabrics at three zloty each. It's as if they have no idea what kind of law it is".

Some context is needed.