Bussinesses worries mount over US tariff conflict
Staff Reporter :
Bangladesh’s export-oriented readymade garment (RMG) sector is facing mounting pressure following the imposition of a 35 percent retaliatory tariff by the United States – a move that now threatens to destabilise the country’s $10 billion trade relationship with its largest single export market.
Despite three days of high-level talks in Washington, which concluded on 11 July, several key issues between the two governments remain unresolved.
According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), progress was achieved on roughly 80 percent of the US’s proposed conditions, but no consensus was reached on the remaining 20 percent-chief among them the steep reciprocal tariff and a contentious 40 percent value addition requirement for Bangladeshi exports.
BGMEA President Hasan Mahmud Babu voiced dissatisfaction with the negotiation process, stating: “We were largely left out of the discussions and only consulted on the final day. While there were some signs of compromise, particularly on the tariff rate, no concrete details were disclosed.”
Industry concerns are intensifying as US retailers begin suspending or cancelling orders, reportedly shifting their sourcing strategies to countries such as Jordan, Egypt, Kenya, and Ethiopia, which benefit from more favourable trade terms.
Bangladesh exported $7.4 billion worth of garments to the US in 2024, and stakeholders fear up to a 30 percent decline in exports to the American market for the upcoming Summer and Autumn/Winter 2026-27 seasons.
Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), warned that the sector’s profitability could collapse under the current tariff regime. “We are already operating on razor-thin margins of under 5 percent.
If we are forced to absorb a portion of the tariff cost, the business model becomes unsustainable,” he said, adding that this could also trigger unhealthy price competition and affect stability in other markets.
On the US proposal for a minimum 40 percent value addition on Bangladeshi exports, BGMEA’s Babu expressed conditional flexibility. “We could consider it if the tariff is brought down to 15 percent,” he said.
However, industry veterans such as former BTMA President Matin Chowdhury cautioned that meeting such value addition levels, particularly in woven garments, would be difficult without significant investment in premium finishing processes.
He also dismissed US concerns about Chinese involvement in Bangladesh’s garment industry, stating that China’s role is minimal and largely limited to supplying synthetic fabrics that are not yet produced locally.
The Bangladesh government has refrained from public comment, citing a non-disclosure agreement with the US side. However, officials including Commerce Adviser Sheikh Bashir Uddin and Security Adviser Khalilur Rahman remain “cautiously optimistic.
” Press Minister Golam Mortoza at the Bangladesh Embassy in Washington noted that further progress was made on the final day, but several items remain unresolved and will require continued inter-ministerial dialogue.
The delegation is expected to return to Dhaka soon, with plans underway for a follow-up round of negotiations – either in person or virtually.
In the meantime, business leaders are urging the interim government, particularly Chief Adviser Dr Muhammad Yunus, to take direct diplomatic initiative, leveraging his international reputation to secure a favourable outcome.
Amid growing uncertainty, industry representatives are calling for a two-pronged approach: sustained efforts to resolve the tariff dispute and long-term diversification of export markets and supply chains. Without swift and decisive intervention, experts warn that the impact on Bangladesh’s largest export sector could be severe and long-lasting.