Bangladeshi garment exporters fear losing their market of US-bound clothing to India as tariffs for India work out to be much lower. American retailers and brands are expected to reduce imports from Bangladesh due to higher costs.
As Bangladesh prepares to respond to the proposed tariff schedules by Sunday or Monday next week, sources spoke of the possibility of the government including representatives from the private sector in the tariff negotiations with the United States.
Bangladesh is currently reviewing the proposals connected with three detailed tariff schedules sent by the US Trade Representative (USTR). The country’s response is being prepared for the third round of talks, set to begin end-July.
Bangladesh Commerce Secretary Mahbubur Rahman was quoted by The Daily Star newspaper as saying: “As the tariff issue includes multiple ministries, the commerce ministry has called an inter-ministerial meeting on Saturday to approve the agreed tariff lines submitted by the USTR.”
Rahman added that Bangladesh had agreed on most of the tariff issues but he refrained from commenting on non-tariff matters.
On the involvement of the private sector’s representatives in the talks, the secretary confirmed plans to involve private sector stakeholders in the negotiations. “We will be reaching out to business leaders from leading chambers and trade bodies,” he said.
It is learnt that the US had sought to be granted zero-duty access to the Bangladeshi market. But, it is also learnt, the number is far lower than Bangladesh’s total list of 7,446 tariff line items.
Earlier this week, the country’s Commerce Adviser Sk Bashir Uddin and Mahbubur Rahman told a press conference that Bangladesh was preparing for the third round of talks. He confirmed that a team would fly to Washington next week.
Potential Setback
Leading Bangladesh think tanks and exporters have warned of serious consequences if US president Donald Trump’s administration’s additional 35 per cent reciprocal tariff on Bangladeshi goods is imposed. They say that the country’s economy will not be able to take the strain of the additional tariffs.
The US apparel import market is projected to shrink significantly this year, dropping from nearly $80 billion to an estimated $65-$70 billion due to increased tariffs on goods from certain countries. This decline poses a substantial threat to Bangladesh’s garment exports to the US, as American retailers and brands are expected to reduce imports due to higher costs.
While Bangladesh faces a potential setback, its competitors like Vietnam, India, and Indonesia have been subject to lower tariff rates, which could allow them to gain a larger share of the US market. Bangladesh is currently the third-largest apparel supplier to the US, holding a 9.2 per cent market share after China and Vietnam. Last year, Bangladesh’s garment exports to the US totalled $8.2 billion.
According to the Daily Star newspaper, a leading Bangladeshi garment exporter, Shovon Islam of the Sparrow Group said his American buyers are already pressing him to cut prices, even though the final tariff rate is yet to be confirmed.
He said that he had to offer much lower prices to secure an order of one million shirts, as the buyer was considering shifting it to India, where tariffs are lower.
“Multinational clothing brands are also negotiating prices for goods meant for other markets like India and Japan, even though Bangladesh enjoys duty-free access there,” Islam told the Daily Star.
“They think production in India is more cost-effective than in Bangladesh because of the lower tariff imposed on India by the Trump administration,” he added. “I am deeply disappointed with the lack of progress demonstrated by the Bangladesh government.”
“As a stakeholder and one of the largest exporters to the US market, I feel utterly helpless and frustrated,” Islam commented.
