Saturday, 12 July, 2025
Industry leaders and economists say Bangladesh failed to capitalise on the three-month grace period offered in April, during which it was expected to reduce the bilateral trade deficit with the US and advance negotiations. Instead, the country finds itself outpaced by competitors like Vietnam, India, and Pakistan, who have moved more swiftly to secure trade concessions or are actively negotiating preferential terms.
Now, the government is racing to salvage talks. The Commerce Secretary is en route to Washington for high-level negotiations with the United States Trade Representative (USTR), National Security Council, and Trump’s top trade advisors. A new draft agreement from the USTR reportedly leaves room for compromise, raising hopes for a possible breakthrough.
The timing of the US decision could not be worse for Bangladesh. The global apparel market is undergoing major realignment:
Post-pandemic inventory strategies among Western brands have shifted toward regional diversification and cost reduction. This has driven increased sourcing from countries with lower duties or Free Trade Agreements (FTAs), such as Vietnam and Mexico.
Vietnam, which exported $18.4 billion in garments to the US in 2024, recently secured a 20% tariff cap — giving it a crucial 15–30% pricing advantage over Bangladesh.
India and Pakistan are reportedly finalising partial exemptions under bilateral frameworks, and China continues to dominate in synthetic and high-tech textiles, despite geopolitical tensions.
Global buyers are consolidating their supply chains, increasingly favouring fewer but more reliable sourcing partners with streamlined logistics, stable trade frameworks, and ESG (Environmental, Social, and Governance) compliance.
In contrast, Bangladesh remains without any FTAs and continues to rely heavily on tariff preferences that are now being rolled back as it transitions from LDC to developing-country status.
“We’ve never been part of any meaningful trade agreement,” said Dr Mohammad Abdur Razzaque, chair of RAPID. “That’s our fundamental weakness — we’re negotiating from a position of disadvantage.”
The US is Bangladesh’s single largest export destination, accounting for nearly 20% of total garment exports. In 2024, Bangladesh exported $8.4 billion worth of goods to the US, of which $7.34 billion came from garments.
With the new tariffs in place, exporters fear losing billions in orders as US retailers reallocate sourcing to lower-tariff countries. Already, signs of buyer hesitation are emerging.
“This could slash our US exports by up to 25% over the next fiscal year,” warned Mahmud Hasan Khan, BGMEA President. “Buyers will go where prices are competitive. If we can't match, we lose.”
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has formally requested a meeting with the Chief Advisor to ensure the sector’s involvement in ongoing negotiations. Industry leaders are also advocating the hiring of Washington-based lobbyists to press Bangladesh’s case directly to US lawmakers and trade officials.
“Some countries started their negotiations earlier and achieved better results,” said Mahmud. “We’re learning from that. We believe room still exists for negotiation.”
In response to US concerns about the trade deficit, Bangladesh removed tariffs on 110 American products and reduced duties on over 600 more in an effort to encourage imports. But these moves failed to significantly shift the trade balance or influence Washington’s stance.
“The government acted, but the private sector didn’t increase imports,” said Dr Mustafizur Rahman, Distinguished Fellow at CPD. “And our capacity to import big-ticket US items like vehicles or defence gear is limited.”
Even Bangladesh’s pledge to buy more US wheat and military equipment may not be enough. The deficit with the US is around $5 billion, but analysts note that Vietnam’s deficit is over $125 billion, yet it secured concessions — raising questions about the logic behind the US approach.
Adding to the challenge, the global garment market is tightening:
The US consumer market is cooling due to inflation, leading to declines in discretionary spending, particularly on apparel.
Major brands are reducing inventory, delaying new orders, and demanding faster delivery cycles — benefiting countries closer to their markets or with better logistics.
Rising production costs in Bangladesh — from higher wages, safety upgrades, and ESG compliance — have already strained margins.
Meanwhile, rivals like Turkey, Mexico, and Egypt are marketing themselves as nearshoring alternatives to Asia, especially for US and European buyers seeking shorter lead times.
Experts argue that Bangladesh must treat the US tariff issue as a wake-up call for broader structural reform. This includes:
Developing FTAs with key partners
Diversifying markets to reduce overdependence on the US and EU
Shifting into value-added products such as activewear, outerwear, and technical garments
Investing in automation and productivity to remain cost-competitive
“We need both tactical negotiation now and strategic vision for the future,” said Mustafizur. “Even if we bring the tariff down to 20%, we must build long-term competitiveness.”
According to Commerce Secretary Mahbubur Rahman, Bangladesh is preparing proposals to prioritise US imports — particularly grains and defence-related goods — as bargaining chips in the ongoing talks. He confirmed that bilateral meetings are scheduled for July 10–11 in Washington.
“We’ve responded to their draft agreement,” Mahbubur said. “The door is not closed. If we act wisely, we can still minimise the damage.”
Government officials are also coordinating with the National Board of Revenue (NBR) and private stakeholders to develop a final negotiation roadmap.
Meanwhile, buyer groups and industry coalitions are also being approached to help influence the US decision-making process.
With the August 1 deadline fast approaching, Bangladesh is running against time. Analysts say the next three weeks will be decisive in determining whether the country can avoid losing its position in the US market — or whether it faces a long, painful reset in global trade dynamics.
“If Vietnam could get a deal, why not us?” Razzaque asked. “We have to think and act fast — or pay the price.”
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Industry leaders and economists say Bangladesh failed to capitalise on the three-month grace period offered in April, during which it was expected to reduce the bilateral trade deficit with the US and advance negotiations. Instead, the country finds itself outpaced by competitors like Vietnam, India, and Pakistan, who have moved more swiftly to secure trade concessions or are actively negotiating preferential terms.
Now, the government is racing to salvage talks. The Commerce Secretary is en route to Washington for high-level negotiations with the United States Trade Representative (USTR), National Security Council, and Trump’s top trade advisors. A new draft agreement from the USTR reportedly leaves room for compromise, raising hopes for a possible breakthrough.
The timing of the US decision could not be worse for Bangladesh. The global apparel market is undergoing major realignment:
Post-pandemic inventory strategies among Western brands have shifted toward regional diversification and cost reduction. This has driven increased sourcing from countries with lower duties or Free Trade Agreements (FTAs), such as Vietnam and Mexico.
Vietnam, which exported $18.4 billion in garments to the US in 2024, recently secured a 20% tariff cap — giving it a crucial 15–30% pricing advantage over Bangladesh.
India and Pakistan are reportedly finalising partial exemptions under bilateral frameworks, and China continues to dominate in synthetic and high-tech textiles, despite geopolitical tensions.
Global buyers are consolidating their supply chains, increasingly favouring fewer but more reliable sourcing partners with streamlined logistics, stable trade frameworks, and ESG (Environmental, Social, and Governance) compliance.
In contrast, Bangladesh remains without any FTAs and continues to rely heavily on tariff preferences that are now being rolled back as it transitions from LDC to developing-country status.
“We’ve never been part of any meaningful trade agreement,” said Dr Mohammad Abdur Razzaque, chair of RAPID. “That’s our fundamental weakness — we’re negotiating from a position of disadvantage.”
The US is Bangladesh’s single largest export destination, accounting for nearly 20% of total garment exports. In 2024, Bangladesh exported $8.4 billion worth of goods to the US, of which $7.34 billion came from garments.
With the new tariffs in place, exporters fear losing billions in orders as US retailers reallocate sourcing to lower-tariff countries. Already, signs of buyer hesitation are emerging.
“This could slash our US exports by up to 25% over the next fiscal year,” warned Mahmud Hasan Khan, BGMEA President. “Buyers will go where prices are competitive. If we can't match, we lose.”
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has formally requested a meeting with the Chief Advisor to ensure the sector’s involvement in ongoing negotiations. Industry leaders are also advocating the hiring of Washington-based lobbyists to press Bangladesh’s case directly to US lawmakers and trade officials.
“Some countries started their negotiations earlier and achieved better results,” said Mahmud. “We’re learning from that. We believe room still exists for negotiation.”
In response to US concerns about the trade deficit, Bangladesh removed tariffs on 110 American products and reduced duties on over 600 more in an effort to encourage imports. But these moves failed to significantly shift the trade balance or influence Washington’s stance.
“The government acted, but the private sector didn’t increase imports,” said Dr Mustafizur Rahman, Distinguished Fellow at CPD. “And our capacity to import big-ticket US items like vehicles or defence gear is limited.”
Even Bangladesh’s pledge to buy more US wheat and military equipment may not be enough. The deficit with the US is around $5 billion, but analysts note that Vietnam’s deficit is over $125 billion, yet it secured concessions — raising questions about the logic behind the US approach.
Adding to the challenge, the global garment market is tightening:
The US consumer market is cooling due to inflation, leading to declines in discretionary spending, particularly on apparel.
Major brands are reducing inventory, delaying new orders, and demanding faster delivery cycles — benefiting countries closer to their markets or with better logistics.
Rising production costs in Bangladesh — from higher wages, safety upgrades, and ESG compliance — have already strained margins.
Meanwhile, rivals like Turkey, Mexico, and Egypt are marketing themselves as nearshoring alternatives to Asia, especially for US and European buyers seeking shorter lead times.
Experts argue that Bangladesh must treat the US tariff issue as a wake-up call for broader structural reform. This includes:
Developing FTAs with key partners
Diversifying markets to reduce overdependence on the US and EU
Shifting into value-added products such as activewear, outerwear, and technical garments
Investing in automation and productivity to remain cost-competitive
“We need both tactical negotiation now and strategic vision for the future,” said Mustafizur. “Even if we bring the tariff down to 20%, we must build long-term competitiveness.”
According to Commerce Secretary Mahbubur Rahman, Bangladesh is preparing proposals to prioritise US imports — particularly grains and defence-related goods — as bargaining chips in the ongoing talks. He confirmed that bilateral meetings are scheduled for July 10–11 in Washington.
“We’ve responded to their draft agreement,” Mahbubur said. “The door is not closed. If we act wisely, we can still minimise the damage.”
Government officials are also coordinating with the National Board of Revenue (NBR) and private stakeholders to develop a final negotiation roadmap.
Meanwhile, buyer groups and industry coalitions are also being approached to help influence the US decision-making process.
With the August 1 deadline fast approaching, Bangladesh is running against time. Analysts say the next three weeks will be decisive in determining whether the country can avoid losing its position in the US market — or whether it faces a long, painful reset in global trade dynamics.
“If Vietnam could get a deal, why not us?” Razzaque asked. “We have to think and act fast — or pay the price.”
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