Worries over US market, advice to proceed strategically

Accenture Footwear & Leather Products, a Savar-based company in Dhaka, exports leather bags, with the majority of its products destined for the United States. After reciprocal tariffs were imposed last year, the company secured orders from a new US buyer. As a result, by the end of last year its exports rose by 18 per cent compared to the previous year.

The reciprocal tariffs imposed by US President Donald Trump were declared illegal last Friday by the Supreme Court of the United States. Shortly afterward, Trump imposed a fresh 15 per cent tariff on goods from all countries under a different law. In this context, AKM Moshfiqur Rahman, managing director of Accenture Footwear & Leather Products, is somewhat concerned about exports to the US market.

Speaking to Prothom Alo yesterday, Moshfiqur Rahman said, “After Trump’s reciprocal tariffs came into effect last year, Bangladesh was in a somewhat advantageous position. We secured a new US buyer at that time. We are currently in talks with another buyer. We are quite optimistic about this market. However, the renewed tariff complications have created uncertainty again.” He added that if tariff rates remain the same for all competing countries, it may not pose a major problem.

In addition to Moshfiqur Rahman, several other exporters spoke to Prothom Alo on Sunday. They said that the renewed volatility over tariffs is certainly a cause for concern. With the reciprocal tariffs declared illegal, equal opportunities may emerge for competing countries, increasing competition. 

Nevertheless, Bangladesh will still have opportunities. To ensure the country does not fall behind others in the current situation, the new government must remain cautious. They also believe that the government should review the trade agreement with the United States. Experts, meanwhile, have advised proceeding strategically.

On 2 April last year, Donald Trump imposed reciprocal tariffs at varying rates on products from 157 countries. Although these were scheduled to take effect on 9 April, they were suspended for three months. 

The United States then began bilateral discussions with various countries. Initially, tariffs on Bangladeshi goods were set at 37 per cent, later reduced to 35 per cent on 8 July. After Bangladesh pledged to increase imports of US goods at both government and private levels, it reached an understanding with the Trump administration, reducing the reciprocal tariff to 20 per cent. The measure took effect on 7 August.

Following the imposition of reciprocal tariffs, Bangladesh signed a reciprocal trade agreement with the United States on 9 February. Under the deal, the reciprocal tariff rate on Bangladesh was reduced to 19 per cent. Within two weeks, however, the US Supreme Court declared the reciprocal tariffs imposed on Bangladesh and several other countries illegal.

Within hours of the court’s ruling last Friday, Trump announced a new 10 per cent tariff on goods from all countries by invoking the Trade Act of 1974. The following day, Saturday, he raised the rate to 15 per cent. The new tariff will take effect from 24 February.

New tariff, new uncertainty

The United States is Bangladesh’s largest export market. In fiscal year 2024–25, Bangladesh exported goods worth $48.28 billion, of which 18 per cent — or $8.69 billion — went to the US market. Of these exports, 87 per cent were ready-made garments, amounting to $7.55 billion in the outgoing fiscal year.

Although Bangladesh was initially at a disadvantage under the reciprocal tariff proposal, it later gained a relatively favourable position compared to competitors. Like Bangladesh, Vietnam’s tariff stood at 20 per cent, while the total tariff rate on Indian goods was 50 per cent. China’s tariff was even higher. As a result, orders for ready-made garments, footwear and other products from Bangladesh increased. However, the recent US court ruling and subsequent tariff announcement have created fresh uncertainty.

Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told Prothom Alo that the renewed uncertainty over tariffs will harm the export sector. “US buyers may adopt a wait-and-see approach, pulling back somewhat to assess the situation,” he said. He added, “We need to review the agreement we signed with the United States, as we may have offered more concessions than we received.”

Concerns, but also opportunities

Sparrow Group of Industries has long exported ready-made garments to the US market. Following the imposition of reciprocal tariffs, it began receiving increased orders from US buyers. To avoid higher tariffs, US buyers shifted high-end garment orders from China to Vietnam, and mid-range orders from Vietnam to Bangladesh. There was also a growing shift of orders from India.

Shovon Islam, managing director of Sparrow Group of Industries, told Prothom Alo that a 15 per cent tariff is preferable to 19 per cent, although uncertainty will persist. “Still, it seems to be moving in a positive direction,” he said. After reciprocal tariffs were imposed, product prices rose. If tariffs are reduced, US buyers’ purchasing power will increase, potentially boosting demand and exports. He noted that Bangladesh’s opportunities will remain as long as its tariff rate stays close to that of competing countries. However, he stressed the need to ensure adequate energy supply, improved port capacity and necessary infrastructure to meet demand.

According to updated statistics from the Office of Textiles and Apparel (OTEXA) under the US Department of Commerce, Bangladesh exported $8.2 billion worth of ready-made garments to the United States in 2025, an 11.75 per cent increase from the previous year. Additionally, Bangladesh exported $387.7 million worth of footwear to the US last year, up 52 per cent year-on-year. In 2024, footwear exports stood at $255.2 million.

Non-leather footwear exporter NPoly Footwear exported $32 million worth of shoes last year, of which 15–17 per cent went to the United States. The previous year, its exports to the US had been minimal. After reciprocal tariffs came into effect, the company secured orders from three new US buyers.

Riyad Mahmud, managing director of NPoly Group, said tariff changes directly affect purchase orders. “When US tariffs on Chinese goods were reduced earlier, buyers temporarily paused orders. In the current situation, some buyers may again take time,” he said. However, he predicted that by 2030 many US buyers will shift a significant portion of their orders away from China. Given higher production costs in Vietnam and Cambodia, Bangladesh has a strong opportunity. “To survive in the short term, the government must take initiatives,” he added.

Bangladesh must proceed strategically

M A Razzaque, chairman of research organisation RAPID, said that uncertainty in the US market is likely to persist for now and businesses must operate accordingly. What is crucial, he noted, is how Bangladesh manages the trade agreement with the United States, since Bangladesh has offered substantial concessions.

Even if reciprocal tariffs are withdrawn, Razzaque said, the Trump administration will expect Bangladesh to honour the trade agreement. The new government, he suggested, could evaluate the finer details of the agreement or refer it to parliament for discussion as a way to gain time.

He advised Bangladesh to proceed strategically rather than creating public controversy over the agreement. Countries such as Malaysia, Cambodia and members of the European Union have remained quiet, observing developments. Bangladesh should also assess how it might eventually withdraw from the trade agreement with the United States, he commented.