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US buyers may attempt to shift the tax burden onto Bangladeshi exporters or divert their orders to countries with lower tariff exposure, potentially undermining Bangladesh's position as the world's second-largest apparel exporter.
The Bangladesh Foreign Trade Institute (BFTI) feared it in a report that was submitted to the Ministry of Commerce to take necessary steps.
On April 02, the Trump Administration announced imposition of reciprocal tariffs on all U.S. trading partners. The minimum tariff rate was set at 10 per cent, with higher, country-specific "reciprocal" rates applied to most countries.
Bangladesh's top competitor in the RMG sector, China, is facing the highest reciprocal tariff rate of 145 per cent. However, other competitors are facing lower tariffs -- Vietnam (10 per cent), Turkey (10 per cent) and India (26 per cent).
"Considering that US buyers can try to pass the tax burden on to Bangladeshi exporters, and likewise, Bangladeshi exporters may try to the shift the burden on to U.S. buyers, there is a risk that U.S. buyers may divert orders to countries with lower tariff exposure, potentially undermining Bangladesh's position as the world's second-largest RMG exporter," BFTI feared.
It is also worried that Bangladesh's economy may face significant disruptions unless the challenges posed by reciprocal tariffs are addressed through trade negotiations and diversification of export markets.
The United States is Bangladesh's largest single-country export destination, accounting for 17.09 per cent of total exports in FY 2023-24, according to the Export Promotion Bureau (EPB).
Bangladesh's top export item to the US is ready-made garments, which currently faces most favoured nation (MFN) tariff rate of 11.8 per cent on knitwear and 9.91 per cent on woven garments.
The BFTI fears that a tariff rate of 37 per cent may significantly erode the price competitiveness of Bangladeshi apparel items in the US market, leading to a decline in export volume, loss of market share to competing countries with preferential access, and adverse impacts on Bangladesh's export earnings, employment, and overall trade balance.
According to the United States Trade Representative (USTR), the U.S. goods trade deficit with Bangladesh was U$6.2 billion in 2024, a 2.0 per cent increase (U$123.2 million) over 2023.
Currently, Bangladesh faces reciprocal tariffs of 37 per cent because the total trade barriers on U.S. imports-including tariffs and non-tariff measures amount to 74 per cent, according to the USTR estimates.
The Trump Administration has stated that it had generously extended a 50 per cent tariff discount to all countries, which means Bangladesh is faced with a 37 per cent tariff on exports to the U.S.
After imposing reciprocal tariff, Chief Adviser of Bangladesh interim government including other nations wrote to the US administration to postpone the imposition tariff.
The commerce Adviser of Bangladesh also wrote to the USTR, outlining Bangladesh's trade action plans and commitments in greater detail.
After requesting from the different countries including Bangladesh, White House announced a 90-day pause on the Reciprocal Tariff Policy on April 9, 2025, concerns remain about the potential impact on Bangladesh-U.S. trade once the pause ends.
On May 07, the USTR, in response to Bangladesh's request, has sought a written proposal from the Bangladesh government to negotiate on the imposition of tariff.
It said that formal negotiations will begin once they receive a written proposal from the Bangladesh government.
In the BFTI report, the state entity has given a set of suggestions to reduce non-tariff barriers to facilitate and expand trade with the U.S.
Contacted, a senior official of the ministry said "We are seriously working on the issue as the US is a largest exporter country.
He added that a detail comments prepared by BFTI has been received regard USA's reciprocal tariff and non-tariff issues.
According to the White House, the objective of this policy is to address the United States' substantial trade deficit and to counteract the non-reciprocal trade practices of its partners-many of whom have long benefited from lower U.S. tariffs while maintaining higher tariff and non-tariff barriers on American exports.
In 2023, the U.S. recorded a trade deficit of USD 1.29 trillion with the rest of the world, according to The International Trade Centre (ITC).
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