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As a major precondition for tariff rethink, the US side wanted 40-percent local value addition to export products as the threshold during negotiations with the Bangladeshi trade delegation.
Apparel-industry leaders in Dhaka disclosed this Saturday, after the latest around of tariff-cut talks in Washington concluded inclusively Friday following some agreements and disagreements.
As trade imbalance against the US is a main plea for the tariff hike, the garment exporters suggest that the United States should grant duty-free market access for clothing made from American cotton to bridge the trade gap as it would enhance imports from the US.
However, the Bangladeshi delegation is engrossed in negotiating a relaxation of this value-addition requirement, seeking a lower threshold as per the 'Rules of Origin'.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Mahmud Hasan Khan (Babu) talked the sticking points during a meeting with Dhaka Reporters' Unity (DRU) Executive Committee on Saturday afternoon at the BGMEA office in Uttara.
President of DRU Abu Saleh Akon and general secretary Mynul Hasan Sohel also talked at the discussion.
Talking with The Financial Express, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) President Mohammad Hatem said the Bangladesh delegation also urged duty-free market access for the apparel made from the US cotton to increase the import of cotton as a way of reducing the bilateral trade gap.
Both leaders made these statements while referring to their discussion with Commerce Adviser Sk Bashir Uddin on Friday night during the meeting with USTR representatives.
He BGMEA President said, "We have tried to meet with the chief adviser to discuss the US tariff issue, but that did not happen.
"We had a meeting with other four advisers the day before yesterday, following that last night we talked with the commerce adviser over phone in the middle of his meeting with USTR. He wants to know if they impose 40-percent local value addition, is it will possible to do business?"
The 40-percent threshold is not final yet and some other instruments also under discussion, the BGMEA leader said, adding that the government should engage businessmen in such discussion which will set their future.
The industry leader also alleged that one of the government representatives failed to negotiate effectively, wasting two valuable months, before another representative was included in the negotiation process.
He questioned how the government could ignore the largest stakeholder if it truly intends to address such an important issue.
"Now the government is giving excuses, citing a Non-Disclosure Agreement (NDA)," he said.
"We also raised this issue in the meeting the day before yesterday. While we are negotiating for a reduction in US tariffs, how could the government impose 2.0-percent AIT on cotton imports -- one of the major export items of the USA?"
He alerts if this message reaches the US government, they might say: 'You're asking us to reduce the trade deficit by buying more cotton.' Isn't that a contradictory move?'
Referring to the commerce adviser, BKMEA president Mohammad Hatem said the negotiations were "very fruitful" but some issues will take further discussion at ministerial meeting.
If the 40-percent value -addition requirement is enforced, Bangladesh's woven exports to the US market will be severely affected. However, knitwear and denim sector will not be affected, he added.
However, Bangladesh has started feeling a trade setback for the ramped-up US tariffs as buyers afresh hold placing work orders for next seasons while exports have fallen sharply since May, apparel exporters say.
Bangladesh's apparel exports to its single-largest destination -- the United States -- fell significantly by 28 per cent in May compared to April 2025 as the duty rose with Trump administration's additional 10-percent duty imposition.
Exporters have said while many of them are 'forcibly' being burdened with the cost of additional 10-percent tariff, some of them are facing dilemma as some buyers have either slowed down negotiation processes while few have halted placing fresh work orders for next season.
Asked about the developments, M Iqbal Hossain, managing director of Patriot Group, said one of his US buyers, Walmart, has halted a work order against 0.9 million pieces of swim shorts for next spring season for the time being.
Talking to the FE, Khandoker Rafiqul Islam, managing director of Designtex Group, said few of his US buyers slowed down the negotiation processes as they made queries frequently about an order while this now has decreased.
He said his companies' exports to the US "had started increasing since last one year which now are at risk of going down or remained stagnant".
Shovon Islam, managing director of Sparrow Group, says they are fearing such halt in work orders in the coming days.
"Many of the big US buyers source from Bangladesh through importers and the importers who have low margins and pay the duty now started holding orders to re-negotiate with both the buyers and suppliers for taking some costs burden by sharing duty and asking discounts from suppliers."
According to United States International Trade Commission (USITC) latest data, US's apparel imports from Bangladesh fell to US$523.28 million in May 2025, a 28-percent drop from US$726.84 million in earnings in April 2025.
Bangladesh earned US$763.81 million in January, US$669.96 million in February, and US$691.31 million in March respectively.
In 2024, Bangladesh's RMG exports stood at US$7.34 billion.
The average duty on locally made RMG products exceeded 22 per cent in May last compared to the average duty of 16 per cent until April 08.
Woven garments recorded the highest 32-percent decline to US$334.06 million, while knitwear exports dropped by 19 per cent to US$189.22 million in May 2025, according to data.
On the one hand, the total import value declined and on the other, the duties paid by US importers increased substantially.
In May, total calculated duties on made-in- Bangladesh garments stood at US$115.95 million, only slightly lower than April's US$142.20 million, due to the lower import base.
The tariff burden was on average was 16.75 per cent in January, 16.32 per cent in February, and 16.62 per cent in March.
In April, duty rate rose to 19.57 per cent after effectiveness of the additional duty mid-month, with May reflecting the full-month impact at over 22 per cent.
The escalating tariffs have prompted many US buyers to reduce placing work orders or shift sourcing from alternative countries, intensifying pressure on Bangladesh's readymade garment industry.
Expressing concern, industry people observed the situation might worsen in the coming months, as US President Donald Trump has formally notified Bangladesh about a flat 35-percent tariff applicable to all Bangladeshi exports on August 01.
On April 2, the US announced reciprocal tariffs on several countries, including a 37-percent duty on Bangladeshi products. Later, the US imposed a 10- percent flat rate for three months that ended on July 09, which extended until August 01.
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