US buyers push Bangladeshi exporters to share extra tariff costs

Following the United States' decision to impose a tariff of 35% on imports from Bangladesh, US buyers have largely suspended negotiations for new orders and are now asking Bangladeshi suppliers to share the cost of extra duties on shipments already in progress.

Exporters in Bangladesh have reported that the new tariff, set to take effect on 1 August, will increase the total duty on most Bangladeshi products entering the US market to around 51%, combining the previous rate of nearly 16% with the new 35%.

Industry leaders warn that if implemented, this could significantly impact Bangladesh's $8.4 billion export market in the US, particularly the ready-made garment sector.

Exporters said that the uncertainty surrounding the new duty has created anxiety, particularly as buyers begin to renegotiate cost responsibilities for shipments already placed but not yet delivered.

"We had a meeting with a US buyer company on Wednesday. They are asking us to bear a portion of the extra money due to the tariff on orders in the pipeline," said Inamul Haq Khan Bablu, managing director of Ananta Garments Limited, which exports over 20% of its total goods to the US market.

He estimated that the total value of purchase orders currently in the pipeline for the US market could be around $2 billion

SM Khaled, managing director of Snowtex Group, another leading garment exporter, noted the widening gap in competitiveness.

"US buyers are saying, 'Bangladesh has 15% more tariff than Vietnam, how will we place orders?'" he said.

Notably, the tariff on Vietnamese products has been finalised at 20%.

Another exporter, who spoke on condition of anonymity, said, "Several US buyers had been waiting to know their government's decision without negotiating orders. Now I do not see any possibility of negotiation on those orders."

Kazi Iftequar Hossain, former president of the Bangladesh Garment Buying House Association, said, "If Bangladeshi products have to enter the US market with 15% more tariff than Vietnam's, then it is normal that buyers there will want to put about 10% of that burden on the supplier."

He added that if additional costs are shifted this way, exporters in Bangladesh will ultimately incur losses and may struggle to sustain their position in the US market over time.

He also warned that any goods shipped from Chattogram Port after the 10th of this month may arrive in the US after August, making them subject to the new 35% tariff.

Exporters are particularly concerned given that the US remains Bangladesh's largest single-country export destination, with total exports valued at $8.4 billion in 2024.

They fear that without swift diplomatic negotiations to reduce or delay the new tariff, orders will continue to fall.

If exporters then attempt to redirect goods to Europe or other regions, they may face lower prices there, potentially destabilising the garment sector as a whole.

Exporters await meeting with chief adviser

In light of the new tariff, leaders from the BGMEA requested a meeting with Chief Adviser Professor Muhammad Yunus on Tuesday to discuss possible steps forward.

However, as of yesterday evening, no schedule had been confirmed.

Mahmud Hasan Khan Babu, president of BGMEA, told The Business Standard, "We are trying to meet the chief adviser, but we have not received a schedule yet."

He added, "We will propose to the government that lobbyists be appointed to negotiate with the US. Besides, we also want to discuss ways to solve the problem by highlighting our losses."

Several exporters expressed frustration over the lack of transparency and engagement in the government's handling of the issue.

"For the past almost three months, businesses do not know what discussions are taking place with the United States. Business opinions have not been taken in these discussions, and they have no engagement," said one BGMEA leader on condition of anonymity.

Another leader added, "The matter is very serious for us. But looking at the government's activities, it seems that the government is taking the matter lightly."