Tariff freeze offers relief to RMG sector

Garment exporters heave a sigh of relief as US President Donald Trump yesterday announced a 90-day pause on “reciprocal” tariffs.

This pause gives Bangladesh enough time to make preparations, said Mohiuddin Rubel, a former director of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

“Bangladesh may be among the highest beneficiaries in the next 90 days as China will face tariffs,” he added.

“But in the long run, the future of the industry will depend on how effectively Bangladesh negotiates with the US in the next 90 days,” said the owner of a major conglomerate exporting garments.

Late last night, Chief Adviser Prof Muhammad Yunus wrote on X, “Thank you, Mr. President, (@POTUS) for responding positively to our request for 90-day pause on tariffs. We will continue to work with your administration in support of your trade agenda.”

Several garment factory owners have said they were relieved by the 90-day pause, but concerns remained.

If the tariffs President Trump announced earlier are put in effect after 90 days, Bangladesh’s $40 billion apparel industry will face a major challenge as the exporters will face up to 53.5 percent duty in the US market, industry insiders say.

For a T-shirt containing less than 20 percent US cotton, the duty used to be 16.5 percent. As the latest 37 percent tariff is an addition to the previous taxes, the rate will reach 53.5 percent, according to owners of some of the largest garment factories.

They add that most of the garment products made in Bangladesh have less than 20 percent US cotton.

A White House order from April 2 reads, “The [new] rates of duty … are in addition to any other duties, fees, taxes, exactions, or charges….”

Duty rates will vary by product, but factory owners estimate the average to be around 50 percent.

Bangladesh is the third largest garment exporter to the US, occupying 9.3 percent of the $105 billion imported clothing market in the US. In 2024, Bangladesh exported garment products worth $7.2 billion to the US.

As the tariff on Chinese goods stays in place, China may flood European markets with cheap clothes, spelling another trouble for Bangladeshi factories that export there, industry insiders fear.

Sharif Zahir, managing director of Ananta Group, said the government should begin intense negotiations with the US authorities.

One of his buyers had cut a previous work order in half amid fears of sales slump in the US, he adds.

Prof Yunus on Monday wrote to President Trump, seeking a 90-day pause for the tariff on Bangladeshi goods.

Commerce Adviser Bashir Uddin sent a separate letter to the US Trade Representative Ambassador Jamieson Greer offering duty benefit on import of 100 American products in Bangladesh.

Courtesy: The Daily Star