The new US tariff policy is set to deal a major blow to Bangladesh’s exports, as increased taxes will fuel inflation and reduce the purchasing power of American consumers.

Economists and exporters fear that this will lead to a decline in global orders for Bangladeshi products.

On April 3, US President Donald Trump fulfilled his election pledge by imposing retaliatory tariffs on various countries, aiming to reduce the trade deficit and protect US industries.

As a result, the tariff on Bangladeshi products has surged to 37 per cent, up from the previous 15 per cent average rate.

Economic impact: Rising prices & reduced demand

Khondaker Golam Moazzem, Senior Research Director at the Center for Policy Dialogue (CPD), warned that Bangladesh’s exports to the US market will suffer severely due to the blanket tariff.

"The increased tax will raise the cost of imported goods in the US, weakening consumer purchasing power and reducing demand for Bangladeshi products. Additionally, the tariff hike will stoke inflation, prompting global buyers to cut back on orders from Bangladesh," he said.

Despite the heavy blow, Bangladesh is not alone—the new tariffs also apply to India, Pakistan, Vietnam, Sri Lanka, Cambodia, and other nations. This levels the playing field to some extent, but exporters insist Bangladesh must act fast.

Industry leaders react

Mohammad Hatem, President of BKMEA, called the tariff increase a “lightning strike” for Bangladesh.

"A 37 per cent tax will significantly impact our export sector. The US is our single largest market for ready-made garments, and this could reduce our total exports," he said.

As an immediate solution, he suggested that Bangladesh should lower its import duties on US goods to negotiate a trade-off, ensuring continued access to the American market.

Former BGMEA President Faruque Hasan criticised the new tariff, stating that Bangladesh should not be subjected to such a high duty rate.

“The average duty on our ready-made garment exports to the US is already 15.2 per cent. In contrast, the European Union applies a flat 12.5 per cent duty across all product categories. However, the US imposes different rates for different fabrics—polyester, knitwear, wool, and trousers—all taxed separately, with an average of 15.2 per cent,” he explained.

Hasan pointed out that most of the cotton, machinery, and textile products Bangladesh imports from the US are either duty-free or taxed at just 1 per cent.

“We haven’t imposed excessive tariffs on US goods, so this move seems unjustified,” he added.

He warned that higher tariffs would reduce overall US imports, which could have a direct impact on Bangladesh’s exports.

“The US imports around $100 billion worth of ready-made garments annually. If tariffs cause a 10 per cent reduction in imports, it will significantly affect Bangladesh, as America is our largest market,” Hasan said.

The bigger picture: Will exports decline?

Experts believe that the new tariff could reduce total apparel imports to the US by 10 per cent, which would hurt Bangladesh the most since the US is its largest export destination.

According to US Office of Textiles and Apparel data:

In January 2024, Bangladesh exported $800 million worth of apparel to the US—a 45.93 per cent increase from the previous year.

In 2024, total Bangladeshi apparel exports to the US stood at $7.34 billion, slightly up from $7.28 billion in 2023.

Now, with steep tariffs in place, Bangladesh’s growth trajectory in the US market is at serious risk. Industry leaders urge the government to engage in swift diplomatic efforts to mitigate the impact and explore possible negotiations under existing trade agreements.