US Tariff for Bangladesh-25 is challenging for our Economy. The Ready-Made Garments (RMG) sector is the backbone of Bangladesh’s economy. As one of the world’s largest garment exporters, Bangladesh relies heavily on international markets, especially the United States. The US is a top export destination for Bangladeshi apparel.
1. Overview of the US Tariff Policy Toward Bangladesh: US Tariff for Bangladesh-25
However, unlike some other developing countries, Bangladesh does not enjoy duty-free access to the US market. This tariff structure has created significant challenges and competitive disadvantages for the Bangladeshi RMG sector. US Tariff for Bangladesh-25 is unexpected for our economy.
In this article, we explore the implications of US Tariff for Bangladesh-25, focusing specifically on the RMG industry. We will delve into trade statistics, competitive analysis, challenges, and policy recommendations to ensure sustainability and growth.
US Tariff for Bangladesh-25 Despite being a Least Developed Country (LDC), Bangladesh does not receive Generalized System of Preferences (GSP) benefits for apparel exports to the United States. While the European Union, Canada, and several other countries allow duty-free access for Bangladeshi garments, the US continues to impose tariffs ranging from 15% to 32% on various RMG products.
Key Points:
- No Duty-Free Access for RMG Products: The US GSP program excludes textile and apparel items, which form 95% of Bangladesh’s exports to the US.
- Tariff Burden: Bangladesh pays nearly $1 billion annually in tariffs to access the US market — one of the highest among apparel exporters.
2. Bangladesh RMG Exports to the US: Current Scenario
Export Data
According to data from the Office of Textiles and Apparel (OTEXA), Bangladesh exported RMG products worth over $9 billion to the US in the fiscal year 2022-23. This made the US the single largest destination for Bangladesh’s garments.
Market Share
Bangladesh ranks as the third-largest apparel exporter to the US after China and Vietnam. However, despite its LDC status, Bangladesh faces higher tariffs than its competitors.
3. Comparative Analysis: Bangladesh vs. Competitors
Vietnam
- Vietnam has signed a free trade agreement (FTA) with the US through the Trans-Pacific Partnership (TPP).
- It enjoys lower tariffs and better supply chain integration.
- Advanced infrastructure and high compliance standards.
Cambodia
- Another LDC like Bangladesh.
- Cambodia also pays tariffs on RMG but benefits from political alliances and investment flows.
China
- Although facing trade tensions and tariffs, China’s RMG exports continue due to its robust manufacturing base and innovation. US Tariff for Bangladesh-25 face for critical situation.
Ethiopia
- Ethiopia, as an African LDC, enjoys duty-free access under the AGOA (African Growth and Opportunity Act).
4. Key Challenges for Bangladesh RMG Sector Due to US Tariffs;US Tariff for Bangladesh-25
A. Competitive Disadvantage
situation make Bangladeshi garments more expensive compared to countries with duty-free access. This erodes Bangladesh’s price competitiveness — a key advantage of its RMG sector.
B. Loss of Market Share
Retailers in the US may prefer sourcing from countries where import costs are lower. This puts Bangladesh at risk of losing its market share, especially in price-sensitive product segments.
C. Supply Chain Disruption
US Tariff for Bangladesh-25 effect on RMG sector relies heavily on imported raw materials (e.g., fabrics from China). Coupled with US tariffs, the final product cost becomes higher, impacting overall profitability.
D. Decreased Investment Incentive
Foreign investors might hesitate to invest in Bangladeshi RMG industries when tariff costs make the products less competitive in key markets like the US.
E. Reduced Profit Margins
Manufacturers may be forced to absorb part of the tariff burden to stay competitive, leading to shrinking margins and hampering sustainability.
Impact on Employment and Economy
The RMG sector employs over 4 million workers, most of whom are women. It contributes over 84% of Bangladesh’s total exports. The pressure from US tariffs may:
- Result in factory closures or reduced production.
- Lead to job losses, especially among vulnerable communities.
- Affect foreign currency reserves, impacting the national economy.
- Slow down infrastructure development and technological upgrading.
5. Efforts by Bangladesh Government and Industry
A. Policy Advocacy
The government of Bangladesh, along with BGMEA (Bangladesh Garment Manufacturers and Exporters Association), has been lobbying the US to grant duty-free access or restore GSP privileges.
B. Trade Diplomacy
Efforts have been made to improve diplomatic ties and present the case of fair trade treatment for Bangladesh as an LDC.
C. Diversification of Markets
To reduce dependency on the US, Bangladesh is exploring non-traditional markets like Japan, South Korea, Latin America, and Africa.
D. Product Diversification
Shifting towards high-end apparel like sportswear, jackets, and fashion garments to gain better margins despite tariff challenges.
E. Sustainability and Compliance
Improving workplace safety, green factory initiatives, and social compliance have enhanced the brand image of “Made in Bangladesh.”
6. Strategic Recommendations
A. Seek Preferential Access
- Bangladesh must actively negotiate bilateral or multilateral trade agreements with the US.
- Explore regional trade alliances or economic partnerships.
B. Promote Value-Added Products
- Invest in design, branding, and fashion innovation.
- Move up the value chain to offset tariff costs with premium pricing.
C. Leverage Digital Trade
- Adopt e-commerce and digital marketing strategies to reach US consumers directly.
- Collaborate with US-based brands and fashion platforms.
D. Strengthen Backward Linkage
- Reduce dependency on imported raw materials by enhancing local textile production.
- Encourage investment in spinning, weaving, and dyeing industries.
E. Public-Private Coordination
- A strong collaboration between government, private sector, and international partners is essential.
- Establish trade think tanks to analyze global trends and formulate policy responses.
US Tariff for Bangladesh-25 regime poses a significant challenge to Bangladesh’s RMG sector, but it also opens the door for strategic reform and diversification. Bangladesh must leverage its strengths — a skilled workforce, competitive pricing, and sustainability leadership — to negotiate better trade terms and expand into new markets. While the road ahead is complex, with the right policy mix and international cooperation, Bangladesh can overcome these barriers and secure a stronger position in global trade.
