957 exporting enterprises at risk due to Trump’s retaliatory tariffs

Global trade is currently in turmoil as a result of retaliatory tariffs imposed by US President Donald Trump. This development has raised significant concern for nearly one thousand Bangladeshi exporters.

A substantial number of domestic enterprises could face severe losses if demand for products decreases or purchase orders are redirected elsewhere due to the new tariffs.

The majority of these enterprises operate within the ready-made garments (RMG) sector.

An analysis of data from the National Board of Revenue (NBR) reveals that, in the fiscal year 2023-24, a total of 7,561 Bangladeshi enterprises exported goods to 212 countries around the world.

Excluding inconsequential and sample consignments, the total value of exports stood at USD 42.69 billion (4,269 crore). Of this, goods worth USD 7.66 billion (766 crore) were exported to the United States by 2,326 Bangladeshi exporters.

It is now pertinent to assess the level of risk facing nearly one thousand of these enterprises exporting to the US. Among the 2,326 exporters to the US market, 957 enterprises were responsible for exporting more than one-quarter of the total value.

In the fiscal year 2023-24, the combined export value from these companies to the US amounted to USD 5.95 billion (595 crore).

Consequently, should US purchase orders decline due to the imposition of a 37 per cent retaliatory tariff, these enterprises could face substantial commercial setbacks.

The level of risk among these 957 enterprises is not uniform- some are more exposed than others. However, 280 enterprises are categorised as being at high risk, as they export 100 per cent of their produced goods exclusively to the United States.

Although their combined export value is relatively low, amounting to only USD 350 million (35 crore dollar), their complete reliance on the US market makes them particularly vulnerable.

A further 236 exporting enterprises fall under the category of upper-medium risk. The US market is the destination of 76-99 per cent of their total exports. In the last fiscal year, the combined export value of these enterprises amounted to USD 2.27 billion (227 crore).

In addition, 181 exporting enterprises have been identified as being at medium risk, as between 51 and 75 per cent of their total exports are directed to the United States. In the last fiscal year, these companies exported goods worth USD 1.71 billion (171 crore).

A further 260 enterprises are categorised under lower-medium risk, with 26-50 per cent of their total exports destined for the US market. The combined export value from these companies amounted to USD 1.51 billion (151 crore).

In contrast, 1,369 exporting enterprises are considered to be at relatively low risk, as only 1 to 25 per cent of their total export volume is directed to the United States. In the fiscal year 2023-24, the total value of their exports stood at USD 1.82 billion (182 crore).

When approached for comment, former President of BGMEA, Rubana Huq, told Prothom Alo that enterprises heavily dependent on the US market are in serious jeopardy.

She stated that there appears to be little indication that President Donald Trump will reverse the policy decisions he has undertaken.

Moreover, she cautioned that this ‘tariff crisis’ in the US market could also have a knock-on effect on the European Union (EU). As US purchase orders decline, affected enterprises may seek to redirect exports to the EU, thereby intensifying competition within that market. This, in turn may prompt EU buyers to negotiate lower prices.

In light of these circumstances, Huq emphasised the urgent need for swift government action to draw the attention of the US President to this critical issue.

In the fiscal year 2023-24, 87 per cent of Bangladesh’s total exports to the United States comprised ready-made garments (RMG), amounting to USD 6.69 billion (669 crore). A total of 1,810 enterprises exported garments to the US during that period. As such, the garment sector remains the most concerned regarding the implications of President Trump’s retaliatory tariffs.

Pacific Jeans Group exported denim garment worth USD 49 million to the United States in the last fiscal year.

Speaking to Prothom Alo, the Group’s Managing Director, Syed Mohammad Tanvir said, “There are both positive and negative aspects for us in light of the US retaliatory tariffs. Due to the diversification in our garment exports, we do not expect a significant decline. For instance, in the denim segment, we hold a competitive edge over our rivals, so there is minimal concern that others will overtake our market share.”

Following ready-made garments, caps represent the second-largest export sector to the United States. In the last fiscal year, Bangladesh exported caps worth USD 330 million (33 crore) globally, of which USD 225.2 million (22 crore 52 lakh) were exported exclusively to the US. This indicates that 68 per cent of the total cap exports were destined for the United States.

Leather footwear holds the third position among Bangladeshi exports to the US market. In the previous fiscal year, Bangladesh exported approximately USD 550 million (55 crore) worth of leather shoes worldwide, with USD 180 million (18 crore) of that directed to the United States. In addition to these, other top export items to the US include home textiles, wigs and leather goods excluding footwear.

Among the domestic business groups, Ha-Meem Group is one of the leading exporters. In the last fiscal year, the group exported ready-made garments worth USD 589.1 million (58 crore 91 lakh) to 63 countries, with approximately 74 per cent of these exports destined for the United States alone. As a single entity, Ha-Meem Group’s Rifat Garments stands as the top garment exporter to the US market, with an export volume of USD 210 million (21 crore). Additionally, nearly all of the products from their Apparel Gallery unit are exported to the United States.

When contacted, AK Azad, Managing Director of Ha-Meem Group, told Prothom Alo, “If the retaliatory tariffs imposed by the United States remain in place, there will be a significant impact. At this point, there is nothing that we, the business community, can do. If our government makes an effort, perhaps something can be done. Otherwise, we must accept whatever consequences follow.”

Chattogram-based Asian-Daff Group exported ready-made garments worth USD 286.7 million (28 crore 67 lakh) in the last fiscal year, with 90 per cent of that total shipped to the United States. Nearly all products from their subsidiaries such as Subarna Garments and Sea Blue Textiles, are exported exclusively to the US market.

In this regard, MA Salam, Managing Director of Asian-Daff Group stated, “We are concerned about the imposition of retaliatory tariffs by the United States. The government should take prompt action through diplomatic dialogue to reduce these additional tariffs.”

In response to a separate question he added, “The higher retaliatory tariffs on Vietnam and China could be advantageous for us. However, the relatively lower tariffs imposed on countries such as India and Pakistan present a challenge. That said, the production capacities of those two countries are significantly lower than ours.”

When asked, Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), told Prothom Alo that enterprises more heavily reliant on the US market are at greater risk due to the imposition of retaliatory tariffs. The extent of this risk will depend on who Bangladesh’s export competitors are. If Bangladeshi exporters are competing with those from China or Vietnam, there may be some strategic advantage. However, competition with countries like India and Pakistan may pose greater challenges.

Additionally, he noted that the imposition of retaliatory tariffs could potentially slow economic growth in both the US and global markets. If this occurs, it would create risks across all export destinations.

Rahman further remarked that the government’s decision to initiate contact with the US administration through the chief adviser is a positive development.

He emphasised the importance of conducting bilateral negotiations as soon as possible, including through platforms such as TICFA. Furthermore, he suggested that Bangladesh should consider increasing its purchases of government goods from the US, encouraging private sector imports from the US and preparing internally by evaluating the feasibility of tariff rationalisation.