Tariff Cut by US Seen as Opportunity for BD Apparel Growth

Mahmud Hasan Khan Babu. Photo: Collected

The president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Mahmud Hasan Khan, has welcomed the recent US decision to reduce tariffs on Bangladeshi apparel, calling it a "much-needed relief" after months of trade uncertainty.

"For the past three months, we've been operating under considerable uncertainty due to reciprocal tariffs. Doing business in such a climate has been extremely difficult," Mahmud said in a statement issued on 1 August.

He noted that US buyers were also closely observing the situation. "Finally, seeing the tariff reduced from 35% to 20% offers us some comfort," he said.

Mahmud pointed out that Bangladesh had repeatedly warned that high countervailing duties, compared to those imposed on competitors, would make trade unsustainable.

"Although our tariff is still 1% higher than Pakistan's, it's now 5% lower than India's and 10% lower than China's, which gives us some competitive edge," he added.

However, he cautioned that higher import duties could temporarily affect trade volume, as US buyers may struggle with upfront costs. "If buyers can't secure additional financing, they might cut back on orders. Eventually, the added cost will likely be passed on to US consumers, potentially reducing retail sales."

Reflecting on the earlier tariff round imposed by the Trump administration in April — which introduced a minimum 10% countervailing duty on goods from all countries — Mahmud said US buyers had managed in different ways, but some Bangladeshi suppliers were pressured to share the burden.

"This time, I want to clearly state: it is the importers and buyers who must absorb the extra cost. Ultimately, it’s the US consumers who will feel the impact," he asserted.

Mahmud also noted that China continues to face a 30% countervailing duty, with final rates yet to be confirmed. "Initial signals suggest China’s final rate won't be lower than ours, which could shift more orders from China to other countries. That presents an opportunity for Bangladesh — but only if we ensure reliable energy supply, enhance Chattogram Port capacity, and maintain political stability."

Although full details of the recent trade agreement are yet to be disclosed, he expressed confidence in Bangladesh’s negotiating team.

“We hope the deal was finalised with the best interests of the country and our business sector in mind,” Mahmud said.

He stressed that Bangladesh must honour the commitments made during the talks, including short-term pledges like wheat, cotton, and LNG imports, as well as long-term obligations such as aircraft purchases.

“Failure to meet these promises could bring fresh challenges,” he warned.