The reduction of US retaliatory tariffs from 35% to 20% has brought much-needed relief to the Readymade Garments (RMG) sector, easing the burden on the industry and restoring some stability. According to Mahmud Hasan Khan, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the past three months have been marked by uncertainty due to these tariffs, which have significantly challenged business operations.
Speaking on the recent tariff changes, Khan noted that US buyers had been closely monitoring the situation. The reduction of retaliatory tariffs from 35% to 20% has brought significant relief to the Bangladeshi garment sector.
Khan emphasized that higher retaliatory tariffs, compared to those of competing nations, could have made business difficult for Bangladesh. While Bangladesh’s retaliatory tariff is 1% higher than Pakistan’s, it remains 5% lower than India’s and 10% lower than China’s, offering much-needed relief to the industry.
He explained that the additional tariffs could lead to a temporary reduction in business, as US buyers would need to absorb the higher import costs, potentially affecting their capital. If additional financing cannot be secured, order volumes may decrease. Ultimately, he added, the burden of these tariffs would be passed onto US consumers, potentially reducing sales due to increased product prices.
Mahmud Hasan Khan highlighted that the Trump administration initially imposed a 10% retaliatory tariff on all countries’ products in April. This was managed by US buyers in various ways, though some suppliers had to share the burden of the increased tariff. Khan sent a clear message to BGMEA members that the additional tariffs must be borne by the importers and buyers, and ultimately, this will impact US consumers.
Regarding China, Khan pointed out that retaliatory tariffs currently stand at 30%, with further increases expected. He believes the ongoing shift of garment purchase orders from China will continue, presenting an opportunity for Bangladesh to expand its business. However, he stressed that factors such as energy supply, Chattogram port capacity, and political stability must remain favorable for the country to fully capitalize on this opportunity.
Khan also mentioned that while only the draft and summary of the agreement have been received so far, he trusts that Bangladesh’s trade delegation has negotiated the deal in a way that secures both national and trade interests.
Another key point raised by Khan was the need for Bangladesh to properly implement its commitments made during tariff discussions. These commitments, ranging from the purchase of wheat, cotton, and LNG to long-term agreements like the purchase of aircraft, must be executed carefully to avoid future setbacks. He warned that any lapse in this regard could lead to further challenges for Bangladesh.