Trump's 35% tariff zaps Bangladesh's $8.4 billion export lifeline

A polo shirt says it all.

When a Bangladeshi exporter ships one to the United States at $10, the American buyer ends up paying $11.16 — courtesy of a 16% import duty. But from 1 August, if the newly announced 35% tariff by the Trump administration kicks in, the same shirt will cost $15.10 — a 51% jump.

"Who will come to buy from us paying 15% more tariff than Vietnam?" asked a visibly concerned Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association.

Infographics: TBS

And that's where the fear lies — that buyers will go elsewhere. Vietnam, already a strong competitor, enjoys a lower tariff regime. If China, India or even Pakistan are spared the harshest treatment while Bangladesh faces the full brunt of the 35% additional tariff in addition to existing average 16% duty, "it will be more than a disaster," Hoque warns.

Billions at risk: The economic fallout

To understand the implications, we must first look at the numbers.

In 2024, bilateral trade between the US and Bangladesh reached $10.6 billion. Of this, $8.4 billion came from Bangladeshi exports to the US, and $2.2 billion the other way around. That gives Bangladesh a trade surplus of $6.2 billion, which, ironically, is now cited as a reason for the tariff hike.

But this surplus is not just numbers on a spreadsheet, it translates into factories, workers, and livelihoods.

Infographics: TBS

Exporters warn that even if just $1 billion worth of orders are rerouted to Vietnam or other countries, it could send shockwaves through Bangladesh's already fragile export situation. The impact could be systemic.

"It will be extremely difficult for Bangladesh to stay competitive in the global market once this 35% tariff is imposed," said Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue. "Doing business, particularly in exports, under such a high tariff regime will be extremely challenging."

And it won't just be the garment factories that bleed. The blow will ripple across the entire economy — banking, insurance, transport, ports, packaging — every cog in the export machinery will feel the shock. Millions of workers, most of them women, face the risk of layoffs as factories struggle to stay open.

Rubana Huq, former president of the BGMEA, calls it "disastrous," pointing out that Bangladesh will now be paying 35% in tariffs while Vietnam gets away with 20%. Worse still, uncertainty looms over whether the existing 16% duty will be added to the new tariff, a scenario that would further decimate competitiveness.

Asif Ibrahim, former president of the Dhaka Chamber of Commerce and Industry (DCCI), painted a grim picture: "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." He fears many factories, especially those heavily reliant on the US market, may not survive.

Selim Raihan, executive director of SANEM, warns that the steep rise in tariffs will erode Bangladesh's crucial price advantage leading to slower economic growth, job losses, and increased poverty. "This is not just a trade issue anymore," Selim stated. "This is about economic stability and social resilience."

Dr Mohammad Abdur Razzaque, international trade expert and chairman of the Research and Policy Integration for Development (RAPID), highlighted Bangladesh' disproportionate risk. 

"Our tariff exposure is higher compared to many competitors. If these duties go into effect as planned, we will be disproportionately affected," he said.

He also noted that a widespread tariff hike could reduce US buyers' purchasing power, shrinking the market and intensifying competition.

"The impact will likely be shared between American buyers and Bangladeshi suppliers — a burden our industry is ill-prepared to absorb," Razzaque warned.

SM Khaled, managing director of Snowtex Group — a leading garment exporter with nearly a third of its shipments destined for the US — shared the bleak outlook. 

"We won't be able to survive in the US market under the new tariff regime," he said. "If the new duty is implemented, buyers will shift their orders to India, Vietnam, and others offering better terms."

"After this, I don't think we'll see those orders come back," he added. "Bangladesh will start losing US business — fast." 

Private sector "kept in the dark"

Adding to the industry's woes is the revelation that the private sector, the engine of Bangladesh's exports, was completely excluded from discussions with the United States during the 90-day window concerning the proposed 35% tariff.

"Whatever Bangladesh exports is done by the private sector. Yet, we were totally excluded from the government's negotiations with the US. We didn't know how they were preparing or what position they were taking," said Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). He expressed shock at the apparent absence of trade experts in the negotiation process.

Shams Mahmud, former president of DCCI and managing director of Shasha Denims, echoed the concern, stating, "Businesses will suffer because of this administrative failure." 
He found it unbelievable that no private sector representative was included, suggesting that leaders from BGMEA, BKMEA, and the Bangladesh Textile Mills Association (BTMA) should have been part of the talks.

Asif Ashraf, managing director of Urmi Group and a key garment exporter to the US market, called the government's lack of engagement a major failure.

"Bangladesh had three months to respond. Yet, no effective steps were taken to reduce the tariff. We repeatedly urged the government to consult the private sector, but BGMEA — the main platform for apparel exporters — was never brought into the conversation."
The business community's frustration is palpable as they face the consequences of decisions made without their input.

Glimmers of hope amidst the gloom

Despite widespread concerns over the steep 35% tariff on Bangladeshi exports to the US, some industry leaders retain cautious optimism.

MA Jabbar, managing director of DBL Group, one of the country's leading apparel exporters, acknowledged the pricing challenges but believes the fallout may not be as severe as feared.

"Countries like Vietnam, India, and Pakistan are facing lower tariffs compared to us. But the type of products we manufacture are often different from those made in Vietnam or China," Jabbar told The Business Standard.

"Even if Vietnam wanted to absorb a larger share of orders, ramping up capacity overnight is not easy. Some orders may shift to India or Pakistan, but I don't think Bangladesh will suffer a massive loss in the US market," he stated, while admitting the pricing gap remains a key hurdle.

Jabbar expressed hope, citing ongoing negotiations with the US. "The government is actively engaged, and we still have time before 1 August. We'll need to wait a bit longer to see how this unfolds."

ABM Shamsuddin, managing director of Hannan Group, another major RMG exporter, shared this sentiment.

"I don't believe exporters will face a massive loss — at least not right now," he said. "Vietnam and India do not yet have the capacity to absorb the volume of apparel orders currently handled by Bangladesh."

"Vietnam, in particular, has already hit the ceiling in terms of apparel production. There's very limited scope for expansion. That gives us a window," he added.

The United States has so far targeted 14 countries, including Bangladesh, with the new tariff regime, while giving others a temporary reprieve until 1 August. The crucial question now is: can Bangladesh negotiate its way out of the crosshairs?

As things stand, a polo shirt may not just cost $15.10 — it may end up costing Bangladesh far more  in economic stability and social resilience.