‘No room for complacency’: BGMEA pushes for more US trade talks despite tariff relief

“A 20 percent tariff will increase production costs at a time when factories are already struggling with rising operational expenses,” says the organisation's chief

Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), has urged the government to continue talks with the United States, warning that there is “no room for complacency” despite the Trump administration’s decision to lower reciprocal tariffs on Bangladeshi goods.

Outlining the trade body's position on the recently announced tariff relief on Saturday, he said: “There’s no scope for complacency because the latest US executive order clearly states that negotiations on trade or security agreements with some countries are still ongoing. Once finalised, these countries may enjoy further tariff reductions. Bangladesh must stay engaged in dialogue."

Highlighting the anxiety faced by apparel exporters over the past four months, Mahmud thanked the US administration for setting a “balanced" tariff rate and the Bangladesh government for its continuous diplomatic engagement “to avert a major crisis”.

However, he warned that the new 20 percent additional tariff would inevitably raise production costs for the export-oriented apparel sector and urged the government to maintain policy support.

“A 20 percent tariff on our exports will undoubtedly increase production costs at a time when factories are already struggling with rising operational expenses. The government must step in, especially to protect small and medium-sized factories from being pushed out of business.”

“We sincerely hope that all existing policy supports remain in place for the sake of the industry and the country,” he said while urging improvements in the efficiency of the National Board of Revenue (NBR), customs, and the Chittagong Port, along with an uninterrupted supply of gas and electricity.

According to Mahmud, the new US tariff on Bangladeshi exports is in line with or even lower than the rates imposed on key competitors like China at 30 percent and India at 25 percent.

He also noted that around 20 percent of Bangladesh’s total export earnings come from the US, and 87 percent of those exports are garments.

The Trump administration initially imposed a 37 percent supplementary tariff on Bangladeshi exports. Although it was paused for three months to allow for negotiations, uncertainty remained among exporters about what Bangladesh could do during that time.

Later, on Jul 9, the US reduced the tariff by only 2 percent, bringing it down to 35 percent. However, the Bangladesh government did not involve the private sector in the negotiation process due to confidentiality agreements. Details of the draft deal were not disclosed either, according to Mahmud.

He added that it was only after BGMEA’s efforts that a connection was established with a lobbying firm to facilitate communication with the US.

Explaining the impact of the revised tariff structure, Mahmud said: “Previously, we paid a Most Favoured Nation (MFN) tariff of 16.5 percent to the US. With the new 20 percent supplementary duty, our total tariff rate stands at 36.5 percent, although this will vary depending on the specific product.”

“About 75 percent of our US exports are cotton-based garments. According to the executive order, if at least 20 percent of the raw materials used are sourced from the US, such as American cotton, the 20 percent supplementary duty will not apply to the value of those materials. So if we use American raw materials, we’ll be eligible for partial tariff relief,” he said.

“So, by using US-origin raw materials, we could receive partial relief from the extra tariffs.”