35% US tariff to be disastrous for Bangladesh's exports, say economists and exporters
"The government had three months to negotiate with the United States. Not being able to conduct any successful negotiations within this time is a complete failure," says a top garment exporter
Highlights:
- Former BGMEA president Rubana Huq calls 35% tariff disastrous for Bangladesh's export sector
- CPD Executive Director Fahmida Khatun says the tariff threatens country's export competitiveness
- Former DCCI president Asif Ibrahim says RMG will face significant challenges
- Sanem Executive Director Selim Raihan calls this tariff 'a harsh economic blow'
- Trump imposes 35% tariff on Bangladesh imports starting 1 August
- Bangladesh Embassy in Washington spokesperson says tariff not final, Bangladesh-US talks are still on
US President Donald Trump's newly announced 35% tariff on Bangladesh will be disastrous for the country's export sector, said Rubana Huq, former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
"If this tariff remains in place, it will be disastrous for Bangladesh's export sector. When Vietnam exports garments at a 20% tariff, we will have to pay 35%. And we are still not certain whether the existing 16% will also be added," she said.
Keep updated, follow The Business Standard's Google news channel
"If that is also added, then the situation will be terrible. We don't know anything about whether the government is negotiating or has negotiated with the United States," Rubana added.
Noting that the opportunity has not yet been lost, she said, "Since Bangladesh has time until August, there is an opportunity to reduce this tariff through discussions during this period. I have learned that government policymakers are either in or are going to the United States. So we are waiting."
Meanwhile, a top garment exporter, speaking to TBS on condition of anonymity, said, "The government had three months to negotiate with the United States. Not being able to conduct any successful negotiations within this time is a complete failure."
Tariff threatens Bangladesh's export competitiveness: Fahmida
CPD Executive Director Fahmida Khatun said Trump's newly announced 35% tariff on Bangladesh threatens the country's export competitiveness.
"It will be difficult for Bangladesh to stay competitive in the global market once a 35% tariff is imposed by the US on its exports," she said.
"Doing business, particularly in exports, under such a high tariff regime will be extremely challenging for Bangladesh," she added.
"Doing business, particularly in exports, under such a high tariff regime will be extremely challenging for Bangladesh"
Fahmida said the impact would ripple across multiple sectors — from the backwards and forward linkages of the ready-made garment (RMG) industry to banking, insurance, and the broader trade ecosystem.
RMG to face significant challenges: Asif Ibrahim
Asif Ibrahim, former president of the Dhaka Chamber of Commerce and Industry (DCCI), said the ready-made garment (RMG) sector, a cornerstone of Bangladesh's economic growth, could face significant challenges as a result of the 35% tariff.
He said the United States is one of Bangladesh's largest export markets, with approximately 20% of the country's garment exports being shipped there. "Without the benefit of a free trade agreement, Bangladesh already faces tough competition in the US market. The new tariff may make Bangladeshi products less competitive, possibly reducing export volumes."
Asif said this change could affect many factories, particularly those that focus on US customers. "Some may struggle to stay open, which could have a direct impact on workers, many of whom are women and the primary breadwinners for their families."
Some may struggle to stay open, which could have a direct impact on workers, many of whom are women and the primary breadwinners for their families.
He said industries that support the garment sector, such as packaging and transportation, as well as local businesses, could also face challenges.
US tariff on Bangladeshi exports a harsh economic blow: Selim Raihan
South Asian Network on Economic Modeling (Sanem) Executive Director Selim Raihan said the United States' levying of a reciprocal tariff of 35% on Bangladeshi exports is a harsh economic blow, especially to the readymade garment industry.
"With US tariffs on Bangladeshi imports now nearly doubling from roughly 15% earlier, this sharp and dramatic hike has the potential to erode the price competitiveness of Bangladesh's garments in its biggest export market," he said.
Mentioning that Bangladesh exported around $8.5 billion to the US in 2024 alone, the Sanem executive director said the burden of this tariff hike will fall heavily on garment manufacturers and the millions of workers they employ, a majority of whom are women, raising the risks of slower growth, job losses, and a rise in poverty.
The burden of this tariff hike will fall heavily on garment manufacturers and the millions of workers they employ, a majority of whom are women, raising the risks of slower growth, job losses, and a rise in poverty.
These are setbacks with wide-ranging economic and social consequences, he added.
Selim commented that the rationale behind these reciprocal tariffs is weak, and this has added to the concerns.
"So far, it remains unclear what reciprocal tariff rates will apply to Bangladesh's major export competitors, such as Vietnam, India, Indonesia, Sri Lanka and Pakistan," he added.
A significant shortcoming of govt: Ali Ashraf
Urmi Group Managing Director Asif Ashraf said Bangladesh's failure to take effective steps to reduce the tariff, despite having a three-month window, is a significant shortcoming of the government.
"We repeatedly urged the government to consult the private sector on how to address this issue. However, the government did not engage with BGMEA, the association of garment industry owners," he added.
Calling the 35% tariff disastrous for Bangladesh's exports, Ashraf said, "If exporters who currently supply to the US market lose access, suppliers from other countries will fill that gap, leading to intense competition," he said.
Urmi Group is a leading garment exporter that currently ships over 10% of its total exports to the US market.
Manufactures will face pricing challenges: MA Jabbar
MA Jabbar, managing director of DBL Group, a leading apparel exporter currently accounting for over 7% of Bangladesh's total annual exports, said Bangladeshi manufactures will face pricing challenges.
"Other countries, especially Vietnam, India, and Pakistan, were imposed lower tariff rates on apparel exports to the US compared to us. However, the products that Bangladesh manufactures are not typically produced by Vietnam or China.
"Also, even if they wanted to, it wouldn't be easy for Vietnam to rapidly expand its production capacity. Some orders may shift to India or Pakistan, but I don't think Bangladesh will face a massive loss in the US market," he told TBS.
"That said, we will face pricing challenges. For instance, as far as I know, India currently has about a 9% lower tariff rate than us. If our tariff rate is 35%, that 9% gap creates a competitive pricing challenge in the US market."
However, Jabbar said he was hopeful, noting that the government is actively negotiating and that there is still time to reach a good resolution.
"But to speak clearly on this matter, we will need to wait a bit longer," he added.
Exporters won't experience massive loss: ABM Shamsuddin
ABM Shamsuddin, managing director of Hannan Group, another top RMG exporter, said he believes that exporters will not experience a massive loss for now.
"Vietnam or India still do not have the capacity to take on a large volume of apparel orders currently produced in Bangladesh.
"Vietnam has already reached its capacity in apparel manufacturing, and there is little scope for further expansion. Therefore, I don't believe we are going to experience a massive loss," he said.
What we know about Trump tariffs so far
After weeks of deliberation, US President Donald Trump sent a letter to Chief Adviser Muhammad Yunus yesterday (7 July), imposing a tariff of 35% on products imported from Bangladesh.
Trump also made the announcement through a post on his social media platform, Truth Social.
Besides Bangladesh, Trump sent letters to the heads of 13 other countries -- Myanmar, Laos, Cambodia, Serbia, Indonesia, Bosnia, South Africa, Tunisia, Malaysia, Kazakhstan, South Korea, Japan, Thailand -- imposing tariffs on their exports to the US, which would be effective from 1 August.
In his letter to CA Yunus, Trump cited a "longstanding and very persistent" trade deficit between the two countries and wrote, "It is a Great Honour for me to send you this letter in that it demonstrates the strength and commitment of our Trading Relationship, and the fact that the United States of America has agreed to continue working with Bangladesh, despite having a significant Trade Deficit with your great Country."
Meanwhile, Golam Mortoza, press minister at the Bangladesh Embassy in Washington, DC, said the 35% tariff imposed on Bangladesh by the US is not a final decision as the discussions are still ongoing.
"Bangladesh is making its utmost effort for a positive outcome, and that possibility is not over yet," Mortoza wrote in a post on Facebook today (8 July).
He said the next round of talks is scheduled for 9 July.
Commerce Secretary Mahbubur Rahman said a meeting has been scheduled this afternoon between Bangladesh and the US regarding the newly imposed 35% tariff on the import of Bangladeshi products.
He said Commerce Adviser Sheikh Bashir Uddin will join the meeting physically in the US, while the trade secretary will join virtually.
Talking to The Business Standard this morning, the commerce secretary said that along with the letter imposing the 35% tariff, the United States has sent a new set of documents for an agreement.
