Mohiuddin Rubel, a former director at the Bangladesh Garment Manufacturers and Exporters Association, was fast asleep at home in Chittagong when someone texted him about President Donald Trump’s latest round of tariffs on U.S. imports. He briefly roused, glanced at the message and went back to bed.
It was only the following morning, with the sun streaming in through the windows, that he registered the enormity of what had happened overnight. Standing in the Rose Garden of the White House on Wednesday, Trump had announced a whopping 37 percent so-called “reciprocal” tariff on Bangladeshi exports — nearly 85 percent of which comprise ready-made garments — to the United States.
“It was a big shock,” said Rubel, an additional managing director at Denim Expert, a jean manufacturer. “We were expecting good growth and good business in the U.S. We never realized that something like this could happen.”
The United States is Bangladesh’s third-largest trading partner after China and India. In 2024, the United States imported $8.4 billion worth of goods from the South Asian nation, which, in turn, received $2.2 billion in American exports, according to the Office of the U.S. Trade Representative. This created a trade surplus of $6.2 billion — one that was 2 percent higher than the $6 billion from the year before — that put Bangladesh in the sightlines for what Trump has characterized as “taking advantage” of the United States.
But the move could have potentially catastrophic consequences for Bangladesh, which is still coming out of a period of chaos and uncertainty following the violent ouster of former prime minister Sheikh Hasina and her “crony capitalist” Awami League government.
For one thing, the country wasn’t prepared for this, Anwar Hossain, who was appointed in October as the BGMEA’s temporary administrator following the dissolution of the trade group’s board of directors, told local media, saying that “it came all of a sudden.” At the same time, Muhammad Yunus, the Nobel Peace Prize laureate at the helm of Bangladesh’s interim government, said through an intermediary that the country’s leaders are hopeful that negotiations are still possible and that “we can craft out the best deal.”
Plenty hinges on this. The orders that had collapsed during that time were showing signs of returning in a pointed swerve from China, which, in the earliest days of the Trump 2.0 administration, had been slapped with 20 percent tariffs that made Bangladesh’s then-15 percent appear like a bargain in comparison.
But while Bangladesh still has a leg up against the world’s second-largest economy — beginning April 9, Chinese imports will be subject to an additional 34 percent hike — the prices of the nation’s goods for U.S. buyers will still see an uptick, especially in comparison with its less-sanctioned neighbors India (26 percent) and Pakistan (29 percent). Its only consolation is that Vietnam, with whom Bangladesh has been jostling for the spot of number-two garment exporter, has been dealt a levy of 46 percent. Sri Lanka, another competitor, also has a heavier yoke of 44 percent.
Part of the calculus, according to Md. Rafiqul Islam Rana, an assistant professor of retailing at the University of South Carolina, is that Bangladesh has one of the lowest minimum wages for manufacturing, though that has proven to be a problem in and of itself, as the 2023 minimum wage protests have shown. It’s important, he said, that Bangladeshi manufacturers “negotiate smartly” with American buyers to “keep their edge.” And since the tariff is reciprocal, Bangladesh must also work with delegates to find ways to lower the 74 percent tariff Trump claims Bangladesh has placed on American imports, which could help ease the overall burden.
“They may have cited only the highest-duty items. We are cross-checking the data,” Abdur Rahman Khan, chairman of the National Board of Revenue, told The Daily Star when asked about the figure. “The U.S. might have referenced either peak or average rates. We are now analyzing the actual numbers.”
Nevertheless, the next few weeks are going to be critical for everyone involved, Rana said. “First things first, they need to sort out the in-transit orders — who’s going to cover the extra costs from the tariff hike?” he added.
That’s the rub for Rubel. No matter who ultimately foots the bill for the tariffs, goods will undoubtedly get more expensive, which could mean that brands buy less. A number of Bangladesh’s 4,000-plus garment factories, most of which haven’t diversified beyond cotton-based apparel, have also organized themselves around making clothing exclusively for the American market. Now they could cede business to seemingly more competitive climes such as Jordan, Honduras or Kenya, which are at the lowest 10 percent tariff level. “We are so dependent on the U.S. market,” he said. “This is the bad part of this.”
Md. Fazlul Hoque, managing director of Plummy Fashion, a “green” knitwear manufacturer in Narayanganj, said he worried that the price squeeze from buyers on suppliers will intensify, as has reportedly been the case with certain big-box retailers and their Chinese manufacturers.
“My thinking is that they will not go for a price hike at the retail side,” he said. “Rather, they will pass on the extra tariff percentage to their suppliers, which could mean a huge price pressure even with orders already placed, in production or in transit.”
That would also spell more bad news Bangladesh’s 4 million garment workers, many of them women, who have had to grapple with the loss of support services from civil society organizations hobbled by America’s foreign aid cuts, said Kalpona Akter, executive director of the Bangladesh Center for Worker Solidarity, a workers’ rights group. She said she’s genuinely worried that this could result in job losses for workers still reeling from the aftermath of the COVID-19 pandemic and the economic downturn stoked by Russia’s attack on Ukraine and the Israel-Gaza conflict.
Faisal Samad, managing director of Savartex Group, a textile manufacturer in Dhaka, as well as a former BGMEA vice president, agreed, saying that the impact will be “very high,” both for U.S. buyers and for factories that conduct significant business with the United States.
“Walmart and Target vendors already have to supply prices that are competitive for the styles that buyers are buying out of Bangladesh,” he said. “Now, with these new tariffs, there will be a significant cost increase on the landed goods. And if tariffs remain, the buyers’ position will be to ask factories to reduce their already tight prices to recover the tariff blow.”
In the long run, there will have to be some give and take, Samad said, adding that “adjustments will have to be made from both ends or Bangladesh will have to find an amicable deal for the U.S. government to amend the tariff structure, given the dependency of the RMG trade on the Bangladesh economy.”
One solution is to narrow the U.S.-Bangladesh trade gap. Just last month, foreign affairs adviser Md. Touhid Hossain suggested that Bangladesh import more American cotton to deflect additional tariffs. Rubel said that even shrinking the new tariffs by 10 percent would put it on a more even keel with Pakistan and India. There’s also the fact that Bangladesh is poised to graduate from the United Nations’ Least Developed Countries category next November, meaning that the European Union could impose a 12 percent tariff on apparel imports that had previously gone untaxed.
“It will be a little bit shaky for us after the LDC graduation, for sure,” he said. “And if the EU acts in the same way as the U.S.? We’ll definitely have a bit of a tough time ahead.”
