Bangladesh needs to continue discussion with US: BGMEA

Bangladesh should continue discussions with the US as many challenges lie ahead in the coming days following a significant tariff cut secured by the South Asian country, BGMEA chief Mahmud Hasan Khan Babu said on Saturday.

"After announcing the reciprocal tariff rate on 31 July by the US government, our competitors will not stop. They will continue discussions with the US administration. So, we have to do so as well. We have many challenges in future," the Bangladesh Garment Manufacturers and Exporters Association president said in a press conference held at the BGMEA complex in the capital.

In a significant diplomatic triumph, Bangladesh has secured a reduced tariff rate of 20% from the United States, down from a previously announced 35%.

This move is a major relief for Bangladesh's export-oriented economy, particularly its vital garment sector.

The new tariff structure follows the third and final round of negotiations held in Washington, DC, between Bangladeshi officials and the Office of the United States Trade Representative (USTR), which concluded on Thursday night.

The BGMEA chief expressed gratitude to the US administration and the Bangladesh team led by Commerce Adviser Sk Bashir Uddin for the tariff reduction and termed the 20% tariff on Bangladeshi goods balanced.

“So, we are in a better position compared to our competitors. Temporarily, we are in a comfort zone. It is big relief news for our garment industry. However, we must increase our capacity to take advantage. We should focus on innovation and product diversification,” he added.

Mahmud said there is no room for complacency in this achievement and it is expected that the government will continue to provide policy support to the industry to enhance its competitiveness.

He expressed hope that with the combined efforts of industry owners, government, labour organisations, and civil society, this tariff can open the door to new possibilities rather than becoming an obstacle.

Replying to a question, the BGMEA president said they do not know the details of the non-disclosure agreement (NDA). “We can know the details after our delegation returns from the US.”

Mahmud, also the managing director of Rising Group, said, “Now we will have to pay a total of 36.5% duty and tariff based on products to enter the US market. There is a 20% tariff along with 16.5% duty. However, buyers must bear the additional tariff.”

But the reciprocal tariff will not apply if the exported products, including ready-made garments (RMG), contain 20% US raw materials.

“About 75% of our exports to the US are cotton-based apparel. The US tariff executive order states that if at least 20% of US raw materials (such as US cotton) are used, this additional 20% tariff will not apply. This means that if we use US raw materials, we will get some additional tariff relief. But some competitors will not get the facility as they produce cotton,” he added.