US buyers shifting tariff burden onto BD exporters

Staff Reporter :

Bangladeshi apparel exporters, who had anticipated a competitive boost from recent US tariff adjustments, are instead finding themselves under fresh strain as American buyers push them to absorb part of the added duty costs.

Since August, when Washington imposed a 20percent reciprocal tariff on Bangladeshi garments, suppliers report that several US brands are demanding they carry between 5percent and 7percent of the extra cost, while others expect them to shoulder nearly the full burden.

Factories that comply are managing to secure contracts, but those that resist face stalled or cancelled orders.

Shovon Islam, managing director of Sparrow Group, which produces about 40 million pieces annually—half destined for the US—said his buyers have insisted on cost-sharing.

“They asked us to bear about one-quarter of the tariff, especially for upcoming seasonal collections. Out of necessity, we accepted,” he explained.

Sparrow is currently absorbing around five percentage points of the tariff, meaning while US retail prices have jumped—e.g., a $100 item now costs $120—Bangladeshi factories are capturing only a fraction of the increase.

Rakibul Alam Chowdhury, head of HKC Apparels in Chattogram, said his factory, which employs 6,500 workers and exports over 90percent to the US, cannot accept loss-making contracts. “Our margins are already razor-thin.

If necessary, we may scale down operations, but we cannot take unsustainable losses,” he said. The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) confirmed that while some members have agreed to partial burden-sharing, others are holding firm.

“We have instructed members to calculate the new tariff carefully and negotiate accordingly,” said BKMEA president Mohammad Hatem.

By contrast, Team Group’s Abdullah Hil Nakib reported that his buyers have accepted higher prices without pressing for discounts, suggesting uneven bargaining dynamics across the sector.

A senior representative of a major US brand acknowledged that suppliers were being asked to take on a share. “Margins are slim. While retailers are absorbing more than half the tariff, suppliers are being asked to cover 1percent to 3percent. Ultimately, US consumers will also bear part of the cost,” he said.

A Dhaka-based buying house executive added that pressure is being spread across the supply chain, with fabric, yarn, and accessories providers also being asked to adjust their prices.

The tariff, introduced in August following negotiations, left Bangladesh with a 20percent duty, compared to 25percent (later raised to 50percent) on India, 20percent on Vietnam, and higher rates on China. Although the rate is lower than some rivals, the anticipated order surge has yet to materialise.

Previously, Bangladeshi apparel entered the US at a 16.5percent duty. With the new levy, the effective rate now stands at 36.5percent. Despite these hurdles, Bangladesh’s US-bound shipments rose 22percent year-on-year to $4.92 billion between January and July, according to US Department of Commerce data.

Total US apparel imports during this period reached $45.8 billion, though imports from China slumped by 21percent. Bangladesh remains among America’s top suppliers, alongside Vietnam, China, India, Indonesia, and Cambodia.

Major buyers include Walmart, VF Corporation, Levi Strauss, Target, Fruit of the Loom, Gap Inc., Tapestry, and PVH. Industry leaders warn that unless exporters strengthen their negotiation capacity and the government provides stronger backing, Bangladesh risks losing the strategic advantage it briefly gained from tariff disparities.