US tariff on Bangladeshi products could have reached 52pc

If the high reciprocal tariffs imposed by US President Donald Trump had remained in effect, many countries, including Bangladesh, would have faced serious economic pressure. However, the tariff hike was suspended for three months as of Wednesday. Despite the suspension, a minimum retaliatory tariff of 10 per cent remains in place.

On 7 April, President Trump issued an executive order imposing a new 37 per cent tariff on Bangladeshi goods—on top of existing tariffs. According to the US International Trade Commission, the average tariff collected on Bangladeshi exports to the US in 2024 was about 15 per cent. If the new tariff had been enforced, the total rate would have jumped to approximately 52 per cent.

Other countries also faced steep tariff hikes: 26 per cent on India, 46 per cent on Vietnam, 32 per cent on Indonesia, 49 per cent on Cambodia, and 29 per cent on Pakistan. The total applicable tariffs—including previous rates—have not been officially released, but industry insiders have made estimates.

A leading Bangladeshi garment exporter, with confirmation from a US buyer, calculated that Bangladesh’s average tariff on garment exports to the US was 11.56 per cent. With the retaliatory tariff, it would have risen to 48.56 per cent.

Based on similar calculations, Cambodia would have paid an average of 60.70 per cent on ready-made garments, Vietnam 57.5 per cent, India 38.47 per cent, Indonesia 43.45 per cent, and Pakistan 41.46 per cent. All these rates have now been temporarily suspended. It’s important to note that tariff rates vary by garment category, and the figures reflect overall averages.

China was the first to face the reciprocal tariffs, initially at 34 per cent, with further hikes added later. On Wednesday, President Trump announced an even steeper 125 per cent tariff on Chinese goods.

Had the tariffs not been suspended, Bangladesh would have faced higher rates than India, Indonesia, and Pakistan—but lower than those imposed on China, Vietnam, and Cambodia.

Former Bangladesh Trade and Tariff Commission member and trade analyst Mustafa Abid Khan had warned of serious consequences even before the suspension. He told Prothom Alo that although Bangladesh’s tariff might be lower than some competitors’, the impact would still be substantial. “Buyers are likely to pass some of the increased cost onto Bangladeshi factories,” he said. “These factories are not equipped to bear that burden. Additionally, demand in the US may fall due to price hikes, and over time, buyers may shift to countries with lower tariffs.”

President Trump, who returned to office for a second term, unveiled the new tariff policy on 2 April in the Rose Garden of the White House. Under the plan, a minimum 10 per cent tariff was imposed on all countries exporting to the US, with 60 countries and regions identified as “major offenders” facing significantly higher rates due to the US’s large trade deficit with them.

The global response was immediate: stock markets plunged, and oil and dollar prices dropped, amid fears of a looming economic recession. Amid this turmoil, President Trump announced on Wednesday a temporary three-month suspension of the retaliatory tariffs.

Bangladesh had actively lobbied for the suspension. On Monday, Professor Muhammad Yunus, chief advisor to Bangladesh’s interim government, sent a letter to President Trump requesting a three-month moratorium.

According to foreign ministry sources, the letter was delivered to the White House the same day. Separately, Trade Advisor Sheikh Bashiruddin wrote to US Trade Representative Jamieson Greer, highlighting that Bangladesh currently offers zero tariffs on 190 products, with plans to extend that to 100 more.

The United States remains Bangladesh’s largest export market. According to the Export Promotion Bureau (EPB), Bangladesh exported goods worth USD 7.6 billion to the US in the 2023–24 fiscal year—over 17 per cent of the country’s total exports.

Data from the National Board of Revenue (NBR) show that 87 per cent of Bangladeshi exports to the US were ready-made garments. Other major exports include hats and caps, leather footwear, home textiles, wigs, and leather goods.

Currently, 2,326 Bangladeshi companies export to the US, with 957 of them sending over a quarter of their total output to that market. Most are in the apparel sector and would have suffered greatly if US orders had declined due to the tariff hike.

Immediately after President Trump’s announcement of new reciprocal tariffs, several Bangladeshi exporters—particularly in the ready-made garments (RMG) and leather sectors—began receiving suspension notices from US buyers for ongoing purchase orders. Some buyers also demanded price reductions to offset potential losses from the increased tariff burden, while others requested delays in shipment.

Dress King, a ready-made garment factory based in Chattogram that exported 5.6 million garments last year—60 per cent of which were destined for the US—reported mounting pressure from American clients. Managing Director Abdul Shukkur confirmed to Prothom Alo that while no orders had been cancelled so far, buyers were insisting on price discounts following the tariff announcement.

Sparrow Group of Industries, one of the country’s leading RMG exporters, also experienced similar disruptions. According to Managing Director Shovon Islam, some US buyers have requested the suspension of purchase orders, while others are negotiating price cuts. He added that the company is still assessing the extent of the impact but confirmed that the reciprocal tariffs are already having short-term consequences.

The top garment exporters to the US market include China, Vietnam, Bangladesh, Indonesia, India, Mexico, Honduras, Cambodia, Pakistan, and South Korea. However, some countries with relatively low garment export capacity—such as Honduras, the Dominican Republic, Turkey, and Egypt—were spared steep tariff hikes under the Trump administration’s reciprocal tariff policy.

Bangladeshi exporters have expressed concern that these tariffs could have disrupted the shipment of goods already under production or in transit to the US.

Prior to the suspension of the tariffs, Fazlul Haque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told Prothom Alo that the biggest immediate challenge was navigating the impact of the retaliatory tariffs. “If we can get through this period, a major setback can be avoided,” he said. He emphasised the need for government support, particularly to protect small and medium-sized factories that are vulnerable to price cuts and suspended orders. “We have long-term potential,” he added. “Countries that are now subject to lower tariffs lack our experience and production capacity.”

The reciprocal tariffs has been suspended for three months. However, uncertainty remains. The key question is what the tariff structure will look like once the suspension ends.