US importers shifting from tax-laden India, China to Bangladesh

Bangladeshi exporters are receiving increased inquiries from American buyers, retailers, and traders as the steep US tariff hike for India and China is making the sourcing from there much costlier.

Industry-insiders say Bangladesh's companies are now securing some non-traditional export orders that US firms previously imported from India, such as hardware items, construction materials, PVC pipes, and PP woven bags, in addition to the country's largest export item-apparel.

Since last Wednesday, Indian exports to the US market have been subject to tariffs of up to 50 per cent. Such an elevated rate is on account of an additional 25 per- cent duty imposed on Indian goods as a penalty for its purchases of Russian oil, on top of an earlier 25 per cent levy already imposed by the Trump administration.

As a result, total tariffs on Indian products such as ready-made garments (RMG), gems and jewellery, footwear, sporting goods, furniture and chemicals have now come to as high as 50 per cent-among the highest imposed by the United States, comparable to those faced by Brazil and China.

To counter the impact of US tariffs, the Indian government is planning to roll out dedicated outreach programmes in 40 countries, including Germany, France, Italy, Spain, the Netherlands, Poland, Canada, Mexico, Russia, Belgium, Türkiye, the United Arab Emirates, Australia, the United Kingdom, Japan and South Korea, to boost textile exports in the wake of the US tariff tempest.

Talking to The Financial Express, Kazal Arifen, AGM of Export Sales at Meghna Bulk Bag Industries Ltd, a concern of Meghna Group of Industries, said the company has done business on the US market for the past few years. "Order flow has been increasing due to the tariff hikes on India and China, but for now, it is mostly at the inquiry stage--it takes time to mature."

They, however, have concern about uneven competition in other potential markets in the shifting trade paradigm. "Our business is currently EU-centric. Since Indian exporters are now shifting their focus to the EU as their US market is at risk, it will create additional pressure on our largest market," he says.

Referring to the Indian government's initiatives, he said, "Their government has introduced several measures to protect their industries, including incentives to enhance competitiveness. We also need similar policy support from our government to compete with Indian exporters in international markets. At the same time, the government should move quickly to strike bilateral trade deals through faster negotiations.

"Otherwise, after LDC graduation, Bangladeshi exports might face a sudden decline."

Echoing Kazal Arifen's views, Akij Pipes Ltd COO Engr. Paritosh Mitra says after the US tariff hike, they received an order that is currently under negotiation. "However, buyers are also concerned about the 20-percent duty on imports from Bangladesh, and some have requested us to share part of that cost."

He further mentions that if the company were granted partial bonded-warehouse facilities for exports, it would help them offer more competitive prices on the global market.

Talking to The Financial Express, Md Saiful Islam, proprietor of Foresight Business Solutions, a trading firm, said, "We are receiving a large volume of orders from the US market across different categories of items-ranging from RMG to hardware products."

They are also exporting some light-engineering products to the US market. But the raw materials import duty is high in Bangladesh. "If the government allows us to get the duty drawback that will be helpful to offering a competitive price," he said.

If the government allocates bond facility for small enterprises of light engineering, which are fully export-oriented, that will be helpful to exploring the US market. "We are planning to establish a manufacturing facility for full US market," he says about their business-expansion plan to cash in on the new tariff regime.

The trading house is also on negotiations with the local ceramic tiles manufactures for sourcing tiles for the US market.

Apparel exporters are also receiving large volumes of inquiries from US buyers following the tariff hikes on imports from China and India. Most factories are currently operating at full capacity.

However, they also fear that Chinese and Indian manufacturers may now shift their focus to the EU market to offset their losses in the US, which could create additional pressure on Bangladeshi exporters.

Talking with the FE, Shovon Islam, Managing Director of Sparrow Group of Industries, said their discussions were underway with several US buyers trying to shift orders away from India.

In addition, talks are also ongoing with an American company to move orders from Vietnam for next summer. The reason, he explains, is that the buyer is relocating higher-value apparel orders from China to Vietnam, while shifting medium-priced apparel orders from Vietnam to Bangladesh.

"For the upcoming spring season, we already have 10-percent more orders, and for summer, up to 15 per cent in additional orders," says Mr Islam.

"To meet this demand, we have sought buyers' approval to extend overtime from two to three hours. However, to sustain the business shifting from India and China, we will also need support from the government."

“We will also need support from the government - on monetary policy and additional support such as uninterrupted energy supply, and cooperation from customs" he added.

Echoing Shovon Islam's views, Abdullah Hil Nakib, Deputy Managing Director at The Team Group, says business inquiries have increased, but buyers are offering low prices in view of the tariff hikes.

He further explains that some buyers are asking manufacturers to share the cost of the tariff increase, which is not feasible. He also notes with concern that the tariff hike could trigger inflation in the US, potentially affecting apparel demand in the coming season.

Abdullah Hil Nakib feels that demand is likely to normalise within six months, as US consumers adjust to the tariff changes.

One of the largest apparel exporters DBL Group’s Vice Chairman MA Rahim said that the 50 percent tariffs on Indian exports to the USA came into effect just two days ago, and it might take some time for business with certain reputed buyers to adjust. "At least a month will be needed," he added.

He also noted that the Indian government immediately reacted by exploring alternative market options such as China, North America, Japan, and South Korea.

"If they focus on EU markets, it may put pressure on Bangladesh's exports," he said, adding that EU buyers are very concerned about product quality. "This will give an advantage to Bangladeshi exporters, as our apparel quality remains better than that of India."

According to the latest data from the Export Promotion Bureau (EPB), Bangladesh's total exports to the United States came to $8.69 billion during the past July-June period -- a notable increase from $7.60 billion a year earlier.

The US market accounted for over 18 per cent of Bangladesh's total export earnings of $48.28 billion in FY25.

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