Bangladesh Faces $250 Million Monthly Hit from New US Tariffs on Garments

Bangladesh's garment industry is bracing for a significant financial burden following the imposition of a new 37% tariff on ready-made garment (RMG) exports to the US. If this tariff is not fully withdrawn, estimates show that the industry could endure a staggering $250 million monthly loss, placing about 1,000 factories at risk and threatening their survival. During the inauguration of the Sammilita Parishad election office on April 19, industry leaders highlighted the urgency for the Bangladeshi government to engage in discussions with the US administration. They agreed that the temporary suspension of the tariff for 90 days was a positive step, yet emphasized the need for a permanent resolution. Md Abul Kalam, a leader in the RMG sector, urged the interim government to escalate diplomatic efforts to avert the looming fiscal disaster. Given that Bangladesh's entrepreneurs typically operate within tight profit margins of 3-4%, the tariff hike could be catastrophic for many companies. Economists attending the event expressed concerns over the shifting dynamics between buyers and suppliers, with buyers increasingly passing additional costs onto producers, making the situation even more challenging. Experts pointed to the need to postpone Bangladesh’s graduation from Least Developed Country (LDC) status to avoid losing trade benefits and urged coordinated action from all stakeholders for upcoming BGMEA elections. Amidst these tribulations, concerns over local businesses being negatively impacted by administrative measures were also voiced. Moreover, discussions must consider the broader trade landscape. As the US imposes steep tariffs targeting mainly Chinese imports, Bangladesh could potentially capitalize on the displacement of Chinese goods in the US market. However, experts cautioned that India and Pakistan might also attract business due to lower tariff rates compared to Bangladesh. Historically, Bangladesh has enjoyed a favorable balance in US-Bangladesh trade; however, predictions suggest increasing competition and pressure on pricing, potentially complicating the market further for local manufacturers. Overall, while current circumstances present substantial challenges for the Bangladeshi garment sector, strategic diplomatic engagement with the US could convert these hurdles into opportunities. Industry leaders emphasize the importance of navigating this complex trade environment tactically, leveraging existing capabilities and focusing on enhancing production competitivity amidst changing market conditions.