US tariffs give BD an edge, but benefits yet to be realised
Muhammad Ayub Ali :
At the outset, the Trump administration’s higher reciprocal tariffs on India and China—Bangladesh’s key RMG competitors—appeared to offer a clear advantage for Bangladesh.
However, industry insiders say the American retail market remains volatile, and any significant positive impact has yet to materialize.
Although some US buyers initially reached out to Bangladeshi exporters via email after the tariffs were imposed, the overall boost has been limited.
The US has imposed reciprocal tariffs of 50 percent on Indian and 30 percent on Chinese shipments, compared to 20 percent for Bangladeshi goods—giving Bangladesh a competitive edge as an alternative sourcing hub for global retailers.
Reciprocal tariffs on Indian garments are higher than on Bangladeshi ones, prompting US buyers to shift sourcing from India to Bangladesh.
As a result, countries like India and China lose demand, while Bangladesh and Pakistan gain, driven by US buyers seeking lower-tariff suppliers.
The other diversion comes from India, as shirt exporters target new markets like the EU—Bangladesh’s key stronghold.
Indian and Chinese spillovers, backed by scale and aggressive pricing, threaten to erode Bangladesh’s margins and market share.
Bangladeshi exporters losing US orders to tariffs can also seek alternative markets, though less easily than their Indian and Chinese counterparts
Md Mohiuddin Rubel, former director of the Bangladesh Garment Manufacturers and Exporters Association, told The New Nation that while the tariffs affect all exporters, Bangladesh will be less impacted than its competitors.
If the US market remains stable, Bangladesh could strengthen its position over countries like China and India.
According to a KPMG survey, 50percent of retail executives reported gross margin declines of 1–5percent due to tariffs. Anecdotal accounts from BGMEA and trade workshops suggest Bangladeshi exporters—especially in garments—could be absorbing 12–14 percentage points of the 20percent tariff through lower FOB prices. These are well above the usual 50-50 sharing.
A KPMG survey found that 50percent of retail executives saw gross margins fall by 1–5percent due to tariffs.
Meanwhile, BGMEA and trade workshop insights indicate Bangladeshi garment exporters may be absorbing 12–14 percentage points of the 20percent tariff through reduced FOB prices—far exceeding the typical 50-50 cost sharing.
Zahid Hussain, a former lead economist at the World Bank’s Dhaka office said, There’s no doubt the tariffs have reduced our market, but compared to India and China, Bangladesh is still performing better.
“The full impact of the tariffs on Bangladesh will become clearer after six months, once more data is available.”
In July and August, many buyers increased their orders following the tariff hikes and in preparation for Christmas, however, exports declined in September as those earlier orders were already fulfilled.