Will Trump’s reciprocal tariff disrupt Bangladesh’s RMG exports?
Apparel exporters are concerned as US president Donald Trump has announced reciprocal tariffs for products entering the US from different countries. Bangladeshi products will now be subjected to a 37 per cent tariff, instead of previous 15 per cent.
The US is the largest single market for Bangladeshi RMG products. In the 2023-24 fiscal year, it accounted for 18 per cent of total RMG exports from Bangladesh. Against the backdrop, the imposition of reciprocal tariffs made the Bangladeshi exporters concerned about the extent of impact.
Alongside Bangladesh, nearly all major garment-exporting nations, except Mexico, faced reciprocal tariffs on different scales.
According to the exporters, the new tariff will have large- or small-scale impacts on exports as it will increase prices and reduce demand for Bangladeshi products in the US market. They underscored the need for initiating state-level negotiations to decrease the tariff at the earliest. If necessary, they suggested that the government lower tariffs on US products to mitigate reciprocal tariffs and help the local exporters remain in competition with global peers.
According to the Office of Textiles and Apparel (OTEXA) under the US Department of Commerce, the US imported garments worth USD 79.26 billion in 2024. Bangladesh, which has long been the third-largest exporter to the US, exported USD 7.34 billion worth of RMG products last year, marking a 73 per cent rise from the previous year. The per square meter price of Bangladeshi clothing stands at USD 3.10.
Other garment exporters to the US are China, Vietnam, Indonesia, India, Mexico, Honduras, Cambodia, Pakistan, and South Korea.
Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said the reciprocal tariff would significantly impact the RMG sector in Bangladesh. But there are opportunities too, alongside challenges.
“Bangladesh should lower import duty on US products. It will lead to no significant losses since the import volume from the US is not so high. Rather, a reduction in tariff will increase exports of RMG and other products,” he noted.
The BKMEA president continued, “We are now manufacturing clothes with cotton imported from the US, and a lion’s share of the products are being exported to the US itself. Therefore, the interim government may take an initiative to achieve the privilege of duty-free exports for the products manufactured with US raw materials.”
China has long been the largest exporter of RMG products to the US as it exported products worth USD 16.51 billion last year. In his first term in office, president Donald Trump slapped China with an additional tariff, and it prompted China to retaliate with similar measures. The trade war reduced exports of Chinese RMG products to the US.
After assuming office in the second term, Trump imposed an additional 10 per cent tariff on Chinese products. Now, he has imposed a 34 per cent reciprocal tariff on China, and it may further reduce exports of Chinese garments to the US.
Vietnam is the second-largest exporter to the US. It exported RMG products worth USD 14.98 billion to the US in 2024, which is 5.67 per cent higher than the previous year. Trump imposed a 46 per cent tariff on Vietnamese RMG exports, which is higher than Bangladesh and China. In the aftermath, Vietnam may see a significant decline in the growth rate of its RMG exports.
India comes at the fourth place in terms of exporting RMG products to the US. In 2024, it exported products worth USD 4.69 billion, with a year-on-year growth rate of 4.95 per cent. Donald Trump announced a 26 per cent reciprocal tariff on Indian imports. India may see a rise in purchase orders as the tariff on Indian products is comparatively lower than other exporters and the Indian government rolled out different stimulus packages for the textile sector.
Other countries facing reciprocal tariff include Honduras (10 per cent), Cambodia (49 per cent), Pakistan (29 per cent), and South Korea (17 per cent). Mexico has been exempted from the latest tariffs, but it faced a 25 per cent tariff in February. Now, none of the major RMG-exporting nations is immune to the US trade policy shift.
Former BKMEA president Fazlul Haque told Prothom Alo that the increased tariffs may not cause an immediate collapse in exports, but it will put pressure on US consumers, potentially triggering opposition to the policy.
“I do not think right now that the reciprocal tariffs will lead to a collapse in exports or RMG products to the US. It is not certain if this policy of President Trump will sustain. The additional tariff will eventually mount pressure on consumers and trigger a strong reaction in them,” he noted.
The former BKMEA leader also cautioned that US buyers may push Bangladeshi exporters to lower garment prices, even for the already placed orders. He emphasised the need for government and private sector collaboration to formulate an effective strategy to combat the challenge collectively.