Bangladesh to use more US cotton to evade 20% reciprocal tariff: BGMEA boss

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) is gearing up its efforts to use more US raw materials in making garments to evade additional 20% reciprocal tariff.

BGMEA president Mahmud Hasan Khan Babu made the announcement at a press conference today held at the BGMEA office.

He said, "20% tariff waiver is a big amount. We already started the process to use US raw materials to get tariff waiver. We need to grab this opportunity. We will do every necessary thing to avail this opportunity."

He said, about 75% of our US exports are cotton-based apparel, and the executive order on tariffs states that if at least 20% of the US raw materials (US cotton) are used, the additional 20% tariff will not be applied during export to the US.

Babu informed the press that BGMEA already started the process of using more US cotton in making garments to evade 20% reciprocal tariff.

Earlier, the US imposed a 37% tariff which was lowered to 35% later on and finally the reciprocal tariff was determined 20%.  

Babu also said, as Bangladesh uses US cotton to make garments, it will give an edge over the competitors.

"To a large extent our main competitors don't use US cotton as they produce themselves," said Babu, adding, "We need to confirm who will certify the use of US cotton and how it will be executed."

Babu also stressed the continuity of dialogue with the US about tariffs saying that there is no room for complacency as other countries are still in dialogue with the US administration.

He said, "Some countries are still in talks with the Trump administration on trade or security deals that may result in even lower tariffs for them. Once finalised, these countries could enjoy further tariff reductions. So, Bangladesh must stay engaged."

Replying to the query of the US order patterns he said, "Many buyers halted RMG orders following the 35 reciprocal tariff but one member informed us that buyers are now placing orders again following the latest outcome on tariff."

Earlier, the US demanded 40% value addition if garments produced in Bangladesh are labelled as Made in Bangladesh.

When a question was asked about value addition, he said, "We don't know under which conditions the tariff was lowered from 35% to 20%. We will discuss with the negotiators whether there is a condition for value addition or not."

Thanking the US government for announcing a balanced tariff structure, Babu said, for nearly four months, this issue has been a matter of concern for us. Now that the additional duty on Bangladesh's exports has been revised down to 20%, we are on more equal footing with key competitors — lower than China's 30% and India's 25%.

He praised the leadership of the interim government, especially the commerce and security advisers, for steering Bangladesh away from a potential crisis.

Inamul Haq Khan, senior vice president; Md Rezwan Selim, vice president; Mijanur Rahman, vice president (Finance); Md Shehab Udduza Chowdhury, vice president of BGMEA was also present at the press conference.