Things don’t look good for Bangladesh: US brands warn exporters amid tariff hike

Highlights

• Major brands say the US tariff outlook is bad for Bangladesh
• AK Azad calls it the worst crisis in his 40-year business career
• Business leaders call for better strategy and clear direction
• Exporters are confused about the government's approach

Bangladeshi exporters are growing increasingly anxious as leading US brands have warned them that negotiations with Washington over the looming 35% additional tariff on Bangladeshi goods are unlikely to yield a favourable outcome, despite the government's ongoing diplomatic efforts.

The tariff, which would raise total duties on certain Bangladeshi products to over 50% when added to the existing 15%, is scheduled to take effect on 1 August. Exporters fear this steep hike could devastate businesses heavily reliant on the US market.

"Those brands have told us that things don't look good for Bangladesh. We are hearing discouraging messages from the US," said AK Azad, managing director of Ha-Meem Group.

He was speaking at a roundtable titled "US Reciprocal Tariff: Which Way for Bangladesh?" held in Dhaka today (20 July).

Azad, a former president of the Federation of Bangladesh Chambers of Commerce and Industry, described the situation as the "worst crisis" in his four-decade career. He said the uncertainty has thrown the export sector into disarray.

"We are moving forward with an innocent government in muddy waters. I have never seen such an innocent government."

Debapriya Bhattacharya, Distinguished Fellow, CPD

"We asked the government to appoint a lobbyist and even contacted the chief adviser's office. They said 95% of the problem was resolved. But on 20 July, I got an email from a major buyer asking how much of the 35% additional tariff I'd bear for goods produced from August."

Azad, who exports $80 million worth of goods annually to that buyer, said his margin was just $1.37 million. "If I have to shoulder 35% of the tariff, how can I survive?" he asked. "The government will leave in a few months, but where will we go?"

Taking a veiled swipe at overreliance on individual influence in diplomacy, Azad remarked, "There's a belief that someone at the top can blow air and fix everything – that's not how trade diplomacy works."

The event was moderated by Prothom Alo Online Editor Shawkat Hossain Masum, attended by Editor Matiur Rahman, economist Selim Raihan, and businessman Anwar-Ul Alam Chowdhury Parvez among others.

'Factories may not last six months'

Exporters representing the ready-made garments (RMG) sector – the backbone of Bangladesh's export economy – echoed the fears.
Mahmud Hasan Khan Babu, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the hike could force many factories to shut down.

"Unless competitors face the same tariff rates, we can't survive. Maybe we'll manage one season by slashing prices, but then the factories will close," he said.

Until recently, Babu said he was hopeful based on unofficial reassurances from government negotiators. "But now we're hearing whispers that they've realised the US Trade Representative (USTR) is not the final authority. It's the Trump administration itself."

"How could it take so long to realise this?" he asked. "Now we can't even find lobbyists – they're all busy representing various countries. Still, we have consulted the Policy Research Institute (PRI) here and three lobbying firms in the US, one of which has agreed to work with us."

Babu also criticised the lack of coordination within the government. "The private sector hasn't been effectively engaged. There's still a tug-of-war between the foreign and commerce ministries."

Sharif Zahir, managing director of Ananta Group, warned that factories exclusively catering to the US market may not last even six months under the new tariff regime. 

"Trump will be in office for three more years – in that time, India and Pakistan will surge ahead in competition," he added.

Zahir also raised concerns about the government's signing of a non-disclosure agreement (NDA) with the US during the negotiations, claiming that business representatives should have been involved. 

"Officials don't understand the 40% value addition issue. Nor are they equipped to handle defence-related discussions. This was a diplomatic failure," he said.

'Paying price for overconfidence'

Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), said the government had misjudged the situation.

"They thought they could solve this through negotiation. There was a mindset to take credit. Those involved believed they could bring the tariff down to 10% or even zero," he said. "We are now paying the price for that overconfidence."

He urged a more cautious and strategic approach. "We must now engage not just with the USTR, but also the US State Department. Lobbyists must be appointed accordingly."

'Never seen such innocent govt'

Debapriya Bhattacharya, also a distinguished fellow at CPD, said the NDA signed during negotiations was unprecedented for Bangladesh. 

"No partner country has ever provided an NDA document before in Bangladesh's history," he said adding, "Instead, a non-paper could have been issued – essentially stating a position without requiring a formal signature. A non-paper creates a sense of responsibility, but what we have now is a binding obligation."

He warned that the NDA now restricts the flow of information even to potential lobbyists. "This is not how smart diplomacy is done."

Debapriya added that while the Trump administration's tariff theory may not last long, the episode should serve as a wake-up call. "It's time we focus seriously on product diversification, boosting productivity, and strengthening institutional capacity."

Taking a direct shot at the interim government's handling of the situation, he said, "We are moving forward with an innocent government in muddy waters."

He added, "I have never seen such an innocent government."

He further warned that weak and uncoordinated governments – especially those lacking political legitimacy – rarely succeed in international negotiations.