A steep 35 percent tariff on Bangladeshi garment exports to the United States would affect far more than the country’s $8 billion annual shipments, according to economists and business leaders.
Rather, they said at a roundtable yesterday that the fallout would ripple through the entire economy, from fabric and accessories suppliers to banks and insurers.
We must meet the USTR’s requirements. This is not merely a misunder- standing, it’s about proactive engagement. As long as we keep discussions open, we can find solutions.
— AK Azad Chairman Ha-Meem Group
“Here, our stakes are far higher than the headline $8 billion export figure from Bangladesh to the US,” said AK Azad, chairman and CEO of Ha-Meem Group, which exports clothing to America.
Referring to ongoing negotiations with the Trump administration and the looming deadline of August 1, when the new rates are expected to take effect, he said, “If we lose, the entire ecosystem will be affected — fabric suppliers, textile mills, spinning mills, accessories manufacturers, banks, insurance companies — the whole economy.”
The roundtable was organised by The Daily Star at its auditorium in the capital.
Other industry leaders expressed similar concerns at the programme. Several said that the higher duties could also affect Bangladesh’s position in other markets, such as Europe and Australia, by increasing competition and pushing down prices.
In the first five months alone, exports to the US reached $3.38 billion, largely due to the frontloading trend. Buyers are nervous—they simply do not know what’s coming.
— Rubana Huq Former president of BGMEA
Rubana Huq, a former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), echoed Azad’s concern, saying the impact would not be confined to shipments bound for the US, Bangladesh’s single largest export destination.
“It is not an exaggeration, it’s a serious possibility. The GDP could drop by at least 1 percent if things proceed as they are now,” she commented.
Until recently, Bangladesh had been paying around 16 percent duty on garments entering the US. That changed in early April, when the US announced a reciprocal tariff of 37 percent. The effect was paused for 90 days, while the revised rate of 35 percent was announced in early July.
This is scheduled to come into effect on August 1. The rate is still much higher than the 20 percent Bangladesh had hoped for.
Huq said uncertainty over the new tariff has already disrupted trade, with US buyers rushing to place orders before the rate takes effect.
“In the first five months alone, exports to the US reached $3.38 billion, due largely to this frontloading trend. Buyers are nervous; they simply don’t know what’s coming,” she said.
“This is not just about big business. It is about millions of workers. It is about real lives. Respecting the NDA shouldn’t come at the cost of losing jobs, shrinking investment, or undermining the very sector that drives our economy,” said the former BGMEA president.
The discussion was moderated by Arun Devnath, deputy editor of The Daily Star.
If the new tariff is slightly higher but still ensures a level playing field, that is acceptable. But ideally, we want it to be at least 10 percent lower than our competitors to remain competitive.
— Mahmud Hasan Khan , President of BGMEA
At the event, Mahmud Hasan Khan, president of the BGMEA, said, “If the new tariff is slightly higher but still ensures a level playing field, that is acceptable. But ideally, we want it to be at least 10 percent lower than our competitors to remain competitive.”
“Factories that export 40 percent or more to the US may face severe losses, and some may shut down entirely. This would lead to massive worker displacement and significant economic challenges,” he said.
He added that while some factories may shift focus to Canada, Japan or Australia, doing so could flood those markets and trigger price drops.
If the US market shrinks, that will be a challenging thing for us. Other market will also feel the pressure. The price pressure is going to be huge.
— MA Razzaque Chairman of RAPID
Mohammad Abdur Razzaque, chairman of the local think tank Research and Policy Integration for Development (RAPID), pointed out that the overall effect would be contraction of the US market.
“Most exporting countries are going to see tariffs being imposed, so overall tariffs in the US market will increase, and that is going to reduce the US market size. That’s quite natural,” he said.
He cited US trade data showing that the country imported $84 billion worth of garments last year.
“If, on average, 20 percent tariffs are imposed on major suppliers, including Bangladesh, then the US market could shrink by $16 billion,” he commented.
A smaller US market would intensify competition elsewhere, especially in Europe, where Bangladesh has a strong presence. “Price pressure is going to be huge,” Razzaque added.
We are being told to be patient — and yes, patience might work in theory. But for our small and medium factories, it is a matter of survival.
— Fazlul Hoque Managing, director of Plummy Fashions
Fazlul Hoque, managing director of Plummy Fashions Ltd, a knitwear exporter, said nearly 900 factories currently export to the US. If large exporters lose business, they would target the EU to make up for lost volume, disrupting the market for everyone.
“We are being told to be patient. And yes, patience might work in theory. But for small and medium factories, it is a matter of survival.”
Hoque said, “Six months might be manageable for big factories, but for smaller ones that depend heavily on the US, it could be a death sentence.”
Hoque, a former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), called for a unified taskforce to assess the post-tariff situation and devise a response.
He said, “If, on August 1, we find ourselves facing the full global duty structure from the US, it will clearly place Bangladesh at a disadvantage. Even if we are currently on par with our competitors, an increase in duties for the rest of the world will inevitably reduce the overall market size in the US. As a result, Bangladesh is likely to lose market share there.”
“We need to identify solutions and strategies to face these immediate challenges. Of course, there are mid-term and long-term issues, but the priority now is ensuring that all suppliers can survive and continue competing in the export market,” added Hoque.
Azad of Ha-Meem Group argued that relying on World Trade Organization (WTO) rules will not help. “First, we have to win this negotiation. If we lose compared to India, Pakistan, and neighbouring countries, we will lose our business.”
He urged the government to act before the deadline. “If duties are imposed — 50 percent or even 35 percent on top of existing tariffs — customers will not continue to buy from Bangladesh,” he added.
Brands, Azad said, had made it clear they would not raise retail prices or absorb additional costs.
Azad also cited difficulties with sourcing yarn locally and fulfilling conditions set by the US Trade Representative. “We must satisfy the USTR’s requirements. This is not merely a misunderstanding; it is about proactive engagement. As long as we engage informally and keep discussions open, we can find solutions.”
We need a decisive deal before August 1. If we lose $8 billion in business, that could mean loss of 800,000 to one million jobs — with devastating social consequences.
— Lutfe M Ayub Chairman of Fountain Garments
Lutfe M Ayub, chairman of Fountain Garments Manufacturing Ltd, said his company sends half of its production to the US and the rest to the EU. Buyers, including Walmart and other major brands, are in “wait and see” mode.
“This waiting period could cost us several idle months, a difficult situation for our factories,” he mentioned.
“If we lose $8 billion in business, that could mean 10 lakh jobs lost, with devastating social consequences.”
“We need to act for our security, our economy, and our future. The government and private sector must work hand in hand to secure a deal that protects our economy and our people,” he added.
“Yesterday, I requested the BGMEA president to engage with major American retailers and brands. Those brands have invested heavily in Bangladesh and cannot easily shift production to countries like India or Cambodia,” Ayub said.
He warned that if things go wrong, he might be among the first to shut shop.
Bangladesh should have a team of experts in place including negotiators and practitioners from both public and private sectors.
— Iftekhar Ahmed Chowdhury, Former adviser of caretaker govt
Former foreign affairs adviser Iftekhar Ahmed Chowdhury called for an expert team of negotiators drawn from both the public and private sectors.
He cautioned against overreacting to the China factor. “China is emerging as a powerful actor in its own right. We must not create a situation whereby we attract Chinese retaliation and thereby jump from the frying pan into the fire.”
Chowdhury said Pakistan had managed to balance competing interests, and Bangladesh should do the same.
“We should reduce single-country dependency while spreading procurement and production across multiple locations.”
“All in all, it is obvious that we in Bangladesh have a hill to climb. It is also obvious that waiting will not make it any smaller,” he added.
We need to align with broader US political economy interests, leveraging US interests in areas like digital economy, oil and gas, and aviation, where there’s win-win outcome.
— M Masrur Reaz, Chairman of Policy Exchange
M Masrur Reaz, chairman of local think tank Policy Exchange Bangladesh, said the country had little time but should still focus on damage control, recovery, and realignment.
“We have to work in crisis mode, in emergency mode. Because this is an existential issue for our economy.”
Offering tariff concessions to the US may not work, said the economist, since imports are private sector-driven. Instead, Bangladesh should explore strategic partnerships based on broader US interests, such as in energy, agriculture, and aviation.
“The US oil and gas lobby is extremely powerful. Bangladesh needs gas. Can we strike better exploration deals? The US agri-lobby is perhaps more influential than the auto or healthcare lobby. They have an interest in cotton, wheat, and soybeans — all of which Bangladesh can absorb more of as our economy evolves.”
“We may be hoping for 20 percent, but we may end up at 35 percent or even 40 percent. With Trump as the final decision-maker, anything is possible,” added the economist.
In the long term, establishing supply chains outside China could be good for Bangladesh and will create opportunities in garment and textile supply chain. But in the short term, it’s a real challenge.
— Kihak Sung Chairman of Youngone
Kihak Sung, chairman of Youngone Corporation, urged Bangladesh’s business community to act together and diversify markets beyond traditional destinations.
“Many companies in Bangladesh still rely heavily on raw materials and components imported from China. In the long term, establishing supply chains outside China could be good for Bangladesh. But in the short term, it is a real challenge,” he said.
He appealed to trade negotiators to push for a grace period. “If they could negotiate an implementation period of at least six months, it would help companies still dependent on Chinese fabrics and components to do alternative sourcing,” he commented.