A Win-Win Tariff Outcome—But Policy Support Is Key to Reaping the Benefits

The recent announcement by the United States to impose a 20 per cent reciprocal tariff on Bangladeshi apparel exports has brought a measure of relief to our export sector. While we had hoped for a lower rate—especially given the initial threat of a 35 per cent tariff—the final outcome is widely seen as a “win-win” for both sides.

Credit must go to the team led by Bangladesh’s Trade Adviser, whose tireless diplomatic efforts over the past few months played a decisive role in achieving this outcome. The team engaged consistently and professionally, ensuring that Bangladesh received equal treatment alongside other major apparel-exporting countries.

The new tariff regime places Bangladesh in a relatively competitive position, particularly when compared to peers like Vietnam and India, which now face tariffs of 20 and 25 per cent respectively. However, we must remain cautious. The global trade environment—especially under the current U.S. administration—remains unpredictable. A single announcement from President Trump could shift this delicate balance, potentially impacting tariffs for Vietnam, India, or even Bangladesh once again.

Exporters must therefore stay vigilant. It is crucial that we do not allow buyers to unfairly pass the burden of the 20 per cent tariff onto us. There is no justification for such pressure—tariffs have risen for all major exporting countries. Buyers still have no immediate alternative sourcing destination that can match Bangladesh’s scale, efficiency, and price.

That said, we must not lose sight of the broader opportunity before us. China’s apparel exports are on the decline, creating a clear vacuum in the global market. Bangladesh and India are well positioned to fill this gap. Vietnam, while strong, may not benefit as much due to its deep reliance on Chinese raw materials. With the potential imposition of an additional 40 per cent tariff on top of existing U.S. duties on Chinese-origin products—bringing the effective rate to as high as 64 per cent—Vietnam’s cost advantage could erode significantly.

This presents Bangladesh with a timely opportunity to capture a share of the orders shifting out of China. But realising this opportunity will require more than just competitive tariffs—it demands domestic preparedness.

At present, several internal challenges are holding us back. These include persistent gas and electricity shortages, severe instability in the banking sector, and restricted access to affordable finance.

If these critical issues are not addressed, Bangladesh risks falling short of its potential to capture the diverted business from China. The ongoing gas crisis and financial sector instability—driven largely by poor monetary governance over the past two years—are suffocating our industries.

We need urgent and coordinated policy interventions. The central bank must facilitate access to low-cost financing for export-oriented industries. Energy shortages must be addressed through priority-based allocation to the industrial sector. Most importantly, we must adopt export-supportive policies that match the scale of the global opportunity before us.

Additionally, I strongly urge our Trade Adviser to pursue duty-free access for Bangladeshi garments made from U.S. raw materials—especially cotton—in the next round of trade negotiations. Such a move would benefit both sides and foster a more equitable and sustainable trade relationship.

Bangladesh’s apparel sector has proven its resilience time and again. With the right support at home, we are confident that we can navigate this new trade environment successfully—and continue to grow as a reliable partner in the global apparel supply chain.

Mohammad Hatem is the President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA)