Apparel exporters welcome US Tariff cut

Apparel exporters in Bangladesh have expressed cautious optimism following the United States’ decision to reduce the reciprocal tariff on garment imports from 35 per cent to 20 per cent. While they welcome the move as a step toward restoring competitiveness in the US market, industry leaders stress that sustained growth will require structural reforms, strategic buyer engagement, and a unified national vision.

Positive, but the challenge remains

Shovon Islam, Managing Director of Sparrow Group, said the decision offers some relief but warned that the effective tariff rate still poses a significant burden.

“We are relieved that the US has announced a reduced reciprocal tariff of 20 per cent on Bangladeshi garments, down from 35 per cent. While this is a positive step, 20 per cent remains high and presents a significant challenge—especially when considering the total effective tariff of around 36 per cent after base tariffs,” he told The Financial Express.

Mr Islam pointed out that the revised tariff brings Bangladesh closer to competitors such as Vietnam (20 per cent), Indonesia (19 per cent), Pakistan (19 per cent), and India (25 per cent), creating a more level playing field. However, he urged local manufacturers to focus on design innovation, industrial engineering, efficiency gains, and product diversification to strengthen competitiveness.

He added that many US buyers have already begun negotiating to share the additional tariff burden, particularly for shipments held since July 31.

“We are engaging with buyers to develop constructive solutions. But for real growth, the government must urgently address critical issues—energy shortages, infrastructure bottlenecks, corruption, port inefficiencies, and restrictive trade policies. Privatisation and targeted support for the RMG sector are essential, ”said Shovon Islam, a former director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

Long-term gains through resilience

Mohiuddin Rubel, Additional Managing Director of Denim Expert Ltd and former BGMEA director, described the tariff revision as a significant development in the evolving trade landscape.

“With a 20 per cent tariff, Bangladesh is now competitively positioned alongside Pakistan, Cambodia, and Vietnam. Compared to India and China, which face higher tariffs, this puts us in a favourable position. It could even encourage buyers to shift sourcing away from China.”

While short-term US retail price hikes may impact export volumes temporarily, Rubel believes Bangladesh’s resilience—proven during past global disruptions—will sustain growth in the long run.

“Post-COVID, Bangladesh has shown remarkable stability and adaptability. Global economic shifts may affect short-term trajectories, but our strategic positioning and historical performance point to long-term success.”

He also emphasised that continued internal stability and proactive government engagement will be essential to protect gains and support future expansion.

A shift in global trade dynamics

Faisal Samad, Director of BGMEA, reflected on the broader geopolitical context of the tariff decision. He pointed to the initial tariff hike by former US President Donald Trump in April as a turning point in global trade diplomacy.

“The initial tariff imposition and the possibility of further hikes, deeply concerned me. From that day on, global trade talks took a new shape—governments from West to East scrambled to secure the best deals for their economies.”

According to Faisal, the Bangladesh government initially hesitated to respond due to the complexity and confidentiality of the negotiations under strict non-disclosure agreements.

“The real work begins now. Even though the revised tariff is lower than India’s and aligned with Vietnam and Cambodia, the cost pressure on our industry remains significant. We now need to renegotiate terms with buyers and chart a long-term roadmap for cost management, opportunity mapping, and market expansion.”

He cautioned against underestimating China, despite its current slowdown in export growth.

“China may be down temporarily, but it’s already reinventing its strategies. Despite high tariffs, their exports haven’t significantly declined in the past three months. That’s something we must not overlook.”

Faisal expressed gratitude to the individuals involved in the negotiation process and called for a coordinated national effort to build resilience and harness future opportunities.

“Now is the time to breathe a sigh of relief—but also to prepare for what’s ahead. We must bring together educational institutions, the government, policymakers, civil society, labour federations, and trade bodies to form a united front. If we can define our national position clearly and collectively, this global economic shift could open new doors for Bangladesh.”

“Alongside the BGMEA president and fellow board members, we are currently reviewing available data to help drive a more strategic, evidence-based approach to industry planning,” he added.

BGMEA President Mahmud Hasan Khan Babu echoed a similar tone, describing the outcome of the prolonged negotiations as “a relief” for Bangladesh.

“Securing a tariff rate that is on par with—or even lower than—our competitor countries will help us maintain our export competitiveness,” he said.

However, he urged the government to follow through on its commitments.

“The authorities must now fulfil the promises made during negotiations, particularly on import-related procedures and other policy conditions.”

Bangladesh’s apparel sector, which accounts for more than 80 per cent of the country’s total exports, had come under immense pressure following the US decision earlier this year to impose steep reciprocal tariffs. With this revised rate now in effect, industry leaders are hopeful—but unanimous in their call for deeper reforms, better infrastructure, and strategic alignment to secure long-term gains in one of their most vital export markets.

newsmanjasi@gmail.com