Saturday, 12 July, 2025
The United States has imposed a 35% tariff on garments imported from Bangladesh, sparking deep concern across the country’s apparel industry—a key pillar of its economy.
This new duty, combined with the existing 15% tariff, brings the total to 50%, placing Bangladesh at a severe disadvantage compared to regional competitors. Industry leaders warn that this steep rate could significantly damage the country’s export momentum and destabilise its garment-driven growth.
The decision comes after a temporary suspension. In April, the US announced a 37% tariff on Bangladeshi garments, which was paused for 90 days following diplomatic appeals. However, on Monday (7 July), President Donald Trump finalised a revised 35% rate, set to take effect from August.
In contrast, Vietnam has successfully negotiated a 20% tariff, maintaining a crucial 15% cost advantage over Bangladesh. Industry insiders believe this gap will likely prompt US buyers to shift sourcing from Bangladesh to Vietnam—a growing player in the global apparel market with stronger trade leverage and recent investments in automation.
Market Trends Paint a Tougher Picture
The global garment trade is undergoing rapid shifts. While total US apparel imports reached around $70 billion in 2024, buyers are increasingly prioritising supply chain resilience, cost-efficiency, and nearshoring. Countries offering trade deals, automation capabilities, and political stability—such as Vietnam and Mexico—are gaining greater preference.
Vietnam, in particular, has positioned itself as a high-efficiency alternative, expanding its synthetic fibre and sportswear capacity and investing in ESG compliance to attract Western retailers. Its garment exports to the US reached $18.4 billion in 2024, compared to Bangladesh’s $7.3 billion—a figure that now risks decline under the new tariff regime.
Bangladesh, the third-largest garment supplier to the US, exported $7.3 billion in apparel in 2024, following $7.1 billion in 2021 and a peak of $9.7 billion in 2022. Despite its resilience, the country’s export share has begun to plateau amid rising global competition and narrowing price margins.
From July to May of FY2024–25, Bangladesh earned $7.31 billion from garment exports to the US—nearly 20% of the total $36.55 billion in apparel exports. Garments account for 90% of Bangladesh’s total US exports. The remainder comes from leather, pharmaceuticals, plastics, and agricultural products.
Exporters Alarmed by Unequal Tariff Structure
Exporters argue that the challenge lies not only in the high tariff itself but in the asymmetry it creates. “The real blow is not the 35%, but Vietnam’s 20%,” said Shovon Islam, former director of the BGMEA. “That 15% pricing gap will shift the bulk of orders away from us.”
Producers say they would be forced to lower prices to remain competitive, effectively absorbing a 15% loss—unsustainable for many small and mid-sized factories. They also expressed frustration over being left out of crucial negotiations during Bangladesh's political transition. Several claim US buyers already began renegotiating prices or halting orders during the April-July uncertainty.
India currently faces a 26% tariff, while BRICS countries are under potential threat of a 10% rate. Pakistan and Vietnam, however, enjoy comparatively favourable trade terms. Bangladeshi exporters now find themselves at a disadvantage on both price and policy fronts.
Tariff Hit Amid Rising Costs and Lost Incentives
Bangladesh’s apparel sector is already grappling with the fallout of its LDC graduation, which has led to the phasing out of various trade privileges. Rising wages, inflation, and investments in safety and sustainability have pushed production costs higher.
“This tariff hits just when the sector is transitioning to a higher-cost model,” said a senior official of a Dhaka-based apparel group. “It threatens to undermine hard-earned improvements in wages and compliance.”
Former BIBM Director Toufic Ahmed Chowdhury denounced the US move as a breach of WTO norms and urged immediate strategic diplomacy. Speaking to Banglanews, he stressed that Bangladesh must urgently negotiate tariff relief or pivot toward resilience strategies—including diversification of markets and value-added exports.
“If diplomacy fails,” he said, “we must survive with our local strengths, just as we have weathered crises before.”
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The United States has imposed a 35% tariff on garments imported from Bangladesh, sparking deep concern across the country’s apparel industry—a key pillar of its economy.
This new duty, combined with the existing 15% tariff, brings the total to 50%, placing Bangladesh at a severe disadvantage compared to regional competitors. Industry leaders warn that this steep rate could significantly damage the country’s export momentum and destabilise its garment-driven growth.
The decision comes after a temporary suspension. In April, the US announced a 37% tariff on Bangladeshi garments, which was paused for 90 days following diplomatic appeals. However, on Monday (7 July), President Donald Trump finalised a revised 35% rate, set to take effect from August.
In contrast, Vietnam has successfully negotiated a 20% tariff, maintaining a crucial 15% cost advantage over Bangladesh. Industry insiders believe this gap will likely prompt US buyers to shift sourcing from Bangladesh to Vietnam—a growing player in the global apparel market with stronger trade leverage and recent investments in automation.
Market Trends Paint a Tougher Picture
The global garment trade is undergoing rapid shifts. While total US apparel imports reached around $70 billion in 2024, buyers are increasingly prioritising supply chain resilience, cost-efficiency, and nearshoring. Countries offering trade deals, automation capabilities, and political stability—such as Vietnam and Mexico—are gaining greater preference.
Vietnam, in particular, has positioned itself as a high-efficiency alternative, expanding its synthetic fibre and sportswear capacity and investing in ESG compliance to attract Western retailers. Its garment exports to the US reached $18.4 billion in 2024, compared to Bangladesh’s $7.3 billion—a figure that now risks decline under the new tariff regime.
Bangladesh, the third-largest garment supplier to the US, exported $7.3 billion in apparel in 2024, following $7.1 billion in 2021 and a peak of $9.7 billion in 2022. Despite its resilience, the country’s export share has begun to plateau amid rising global competition and narrowing price margins.
From July to May of FY2024–25, Bangladesh earned $7.31 billion from garment exports to the US—nearly 20% of the total $36.55 billion in apparel exports. Garments account for 90% of Bangladesh’s total US exports. The remainder comes from leather, pharmaceuticals, plastics, and agricultural products.
Exporters Alarmed by Unequal Tariff Structure
Exporters argue that the challenge lies not only in the high tariff itself but in the asymmetry it creates. “The real blow is not the 35%, but Vietnam’s 20%,” said Shovon Islam, former director of the BGMEA. “That 15% pricing gap will shift the bulk of orders away from us.”
Producers say they would be forced to lower prices to remain competitive, effectively absorbing a 15% loss—unsustainable for many small and mid-sized factories. They also expressed frustration over being left out of crucial negotiations during Bangladesh's political transition. Several claim US buyers already began renegotiating prices or halting orders during the April-July uncertainty.
India currently faces a 26% tariff, while BRICS countries are under potential threat of a 10% rate. Pakistan and Vietnam, however, enjoy comparatively favourable trade terms. Bangladeshi exporters now find themselves at a disadvantage on both price and policy fronts.
Tariff Hit Amid Rising Costs and Lost Incentives
Bangladesh’s apparel sector is already grappling with the fallout of its LDC graduation, which has led to the phasing out of various trade privileges. Rising wages, inflation, and investments in safety and sustainability have pushed production costs higher.
“This tariff hits just when the sector is transitioning to a higher-cost model,” said a senior official of a Dhaka-based apparel group. “It threatens to undermine hard-earned improvements in wages and compliance.”
Former BIBM Director Toufic Ahmed Chowdhury denounced the US move as a breach of WTO norms and urged immediate strategic diplomacy. Speaking to Banglanews, he stressed that Bangladesh must urgently negotiate tariff relief or pivot toward resilience strategies—including diversification of markets and value-added exports.
“If diplomacy fails,” he said, “we must survive with our local strengths, just as we have weathered crises before.”
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