Bangladesh’s garment sector gets a tariff break – but rivals still threaten

Bangladesh may have won a crucial tariff reprieve from the United States but exporters in the key garment industry remain concerned that they face stiffer competition from regional rivals and higher operating costs.

The US this month reduced its tariff on Bangladesh’s garments to 20 per cent from an earlier proposed 35 per cent levy – a move seen as key to preserving the country’s competitive edge in its biggest export market.

Industry leaders and government officials have welcomed the decision, with interim Prime Minister Muhammad Yunus calling it a “decisive diplomatic victory”.

Even with the reduction, the levy on the country’s garment exports to the US amounts to 36.5 per cent, including a pre-existing 16.5 per cent tariff, according to Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association.

The new tariff applicable to Bangladesh is broadly aligned with those imposed on exporters from Sri Lanka and Pakistan and is potentially higher than the levy for Vietnam.

“Yes, the new tariff will give some relief. At the same time, the overall tariffs will still be higher than before, which means our garments will become more expensive for US buyers,” said Abdul Wadud, whose company Winter Group exports knitwear and jumpers globally.