US reciprocal tariff: Bangladesh gaining business China has lost
The reciprocal tariffs imposed by the United States on goods from various countries have not yet been officially implemented. However, their impact is already being felt in apparel exports to the US.
Compared to the first half of last year, China’s exports to the US dropped by $1.11 billion in the first six months of this year (January–June). In contrast, Vietnam’s apparel exports increased by $1.19 billion and Bangladesh’s by $850 million during the same period.
In the first half of this year, the US imported apparel worth $38 billion from various countries, which is a 6.76 per cent increase compared to the same period last year. From January to June, Bangladesh's apparel export growth reached 25 per cent — the highest among the top ten exporting countries.
Several garment exporters told Prothom Alo that Bangladesh is receiving the orders that China has lost. This trend has been visible over the past 6–8 months. Due to the reciprocal tariffs, even more orders may come in the upcoming season, as Bangladesh currently holds a favourable position compared to its competitors.
On 31 July, the US administration announced revised reciprocal tariffs on imports from various countries. The new tariffs will come into effect today, Thursday. Under the revised rates, goods from Bangladesh and Vietnam will face a 20 per cent reciprocal tariff, while Indian goods will face a 25 per cent tariff.
However, due to India’s purchase of Russian oil, former President Trump imposed an additional 25 per cent tariff on Wednesday, bringing the total tariff on Indian goods to 50 per cent. The reciprocal tariff rate for Indonesia, Cambodia, and Pakistan will be 19 per cent.
Negotiations between the US and China over tariffs are ongoing. For now, Chinese goods remain subject to a 30 per cent reciprocal tariff.
According to updated statistics from the Office of Textiles and Apparel (OTEXA) under the US Department of Commerce, Bangladesh exported apparel worth $4.25 billion in the first six months of this year (January–June). This marks a 25.13 per cent increase compared to $3.4 billion in the same period last year.
Alongside the rise in export volume, Bangladesh’s share in the US apparel market has also grown. Last year, Bangladesh exported apparel worth $7.34 billion to the US, capturing a 9.26 per cent market share. By the end of June this year, that share had increased to 10 per cent.
Several industry leaders told Prothom Alo that US President Donald Trump during his first term had initiated a trade war with China, which gradually led to a shift in purchase orders away from China. During last year’s election campaign, Trump announced plans to impose additional tariffs on China. As a result, many US buyers began increasing their orders from Bangladesh, leading to a steady rise in the country’s apparel exports.
When asked, Arshad Jamal, Chairman of the Tusuka Group, told Prothom Alo: "Orders for the upcoming spring/summer season will begin to come in from September. That’s when we’ll get a clearer picture of how much additional business is coming our way. However, we are currently in a favourable position. Along with US buyers, European buyers are also increasing their orders, as many European retailers have 10–15 per cent of their business in the US."
He added: "If we can use US cotton, it may help reduce the impact of reciprocal tariffs. If the current tariff structure remains unchanged, it could create a good opportunity for our business."
Meanwhile, Vietnam has surged well ahead of China in the US apparel market. In the first half of this year, Vietnam exported apparel worth $7.77 billion to the US, an increase of nearly 18 per cent compared to the same period last year. Vietnam now holds a 19.79 per cent share of the US apparel import market.
In the first six months of this year, China’s apparel exports were $2.04 billion less than Vietnam’s. During this period, China exported apparel worth $5.73 billion — a 16 per cent decline compared to the same period last year. Its market share also dropped to 18.88 per cent.
According to OTEXA data, in the first half of this year, India exported apparel worth $2.84 billion — a 16 per cent increase from the same period last year. Meanwhile, Indonesia exported apparel worth $2.26 billion from January to June, marking 18 per cent growth.
When asked, Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told Prothom Alo, “Due to the reciprocal tariffs, purchase orders will shift away from China. A large portion of the higher-value apparel orders will go to Vietnam, while most of the lower-value orders will come to Bangladesh and India. In this case, Bangladesh is in a favourable position.”
Mohammad Hatem added, “Compared to competitor countries, Bangladesh is in a better position when it comes to reciprocal tariffs. Since the beginning of this year, orders have started shifting away from China, and a portion of those orders is coming to Bangladesh. We have advised our members not to share the tariff burden with US buyers.”