Eased U.S. tariffs create chances for Bangladesh amid exporter’s measured outlook

NN Online:

From this August, Bangladesh is required to pay an additional 20 percent tariff, along with the existing 15 percent, on its exports to the United States. Vietnam faces the same tariff rate.

In contrast, China must pay the highest tariffs, while India is subject to an additional 50 percent. Although Vietnam’s tariff rate matches Bangladesh’s, the country will face higher costs due to transshipment, leaving Bangladesh in a more advantageous position than its rivals, Vietnam, China, and India, in the US apparel market.

India’s garment exporters receive extra policy support domestically, and the country’s emergence as a growing apparel exporter has posed risks for Bangladesh. However, with the US now imposing a 50 percent tariff on Indian products, that challenge has eased to some extent, according to exporters. They argue that the varying tariff structures imposed by the US on different countries have created new opportunities for Bangladesh to expand its exports.

In this regard, Shovon Islam, former director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and managing director of Sparrow Group, said it would be unwise to become overly optimistic about higher tariffs on China or India. “Ultimately, such tariff issues will be settled among the big market players,” he explained. India still has until August 27, and there is a strong possibility of negotiations or extensions before then, meaning the announced 50 percent reciprocal tariff may never take effect.

Speaking to Banglanews, he added that instead of relying on tariff hikes against other countries, Bangladesh must focus on strengthening its capabilities. This includes addressing non-tariff barriers within government infrastructure—such as customs, VAT and taxation, banking, ports, the energy sector, as well as delays and instability—that increase lead times.

He further said that capacity building is possible with active participation from all stakeholders. Non-tariff barriers must be removed through collective efforts, and in this regard, BGMEA’s cooperation is crucial.

In April, the United States abruptly imposed a 37 percent tariff on Bangladeshi products. This was later reduced to 35 percent in the first phase, following a 2 percent cut. After negotiations and a non-disclosure agreement, on July 31, Washington further reduced tariffs by 15 percent, bringing them down to 20 percent. As a result, Bangladesh is now paying 35 percent in total, including the original 15 percent.

Alongside Bangladesh, the US has also imposed new tariffs: 20 percent on Vietnam, 50 percent on India, 19 percent on Pakistan, 19 percent on Indonesia, and 41 percent on China.