Bangladesh seeks tariff relief as US raises garment duties
The Prime Minister of Bangladesh, Muhammad Yunus, has written to US President Donald Trump, committing to purchase more American cotton, reports the "Financial Times". The Bangladeshi government aims to stabilise the garment industry in response to the US imposing a 37% tariff on exports from the country.
The British daily forecasts that the American tariffs will cause significant challenges for the garment industry, which operates on thin margins, while simultaneously contributing to 80% of Bangladesh's export revenue.
This industry also plays an important social role, enabling millions of women to enhance their financial status. Economists have long cautioned Bangladesh about over-relying on a single sector for its economic stability.
In the correspondence to Trump, Yunus promised to lower Bangladesh's tariffs on American goods, including gas turbines, semiconductors, and medical equipment. He also proposed significant increase in imports of wheat, maize, and soya beans. The Prime Minister also requested a three-month grace period for tariff payments to allow the government in Dhaka to accept a larger volume of US exports to Bangladesh.
The White House has yet to respond to Yunus’s letter.
As reported by the "FT", Bangladesh is the world's second-largest cotton importer, following China. The primary source of cotton imports for the country during 2023-24 was West African countries (35%), followed by India and Brazil. The United States provided 11% of the imports.
Garment exports from Bangladesh go to retail chains in the US
According to Bangladeshi garment producers supplying American companies, if the tariffs persist, they will lose customers to more competitive markets. Producers have mentioned Egypt and Kenya, which have 10% tariffs, and Jordan, with 20% tariffs, as potential competitors.
The majority of garment exports from Bangladesh are destined for major American retail chains, such as JCPenney, Target, and Walmart, where many budget-friendly clothes are sold. Clothing companies anticipate that this sector could suffer more than the one linked with premium brands such as Ralph Lauren or Tommy Hilfiger.
