Additional tariff exemption on US raw materials

Bangladesh will get partial tariff exemptions on garments exported to the United States if they are made with US cotton. This provision has been included in President Donald Trump’s latest executive order regarding counter-tariffs, issued on July 31.

However, to qualify for this exemption, at least 20% or more of the total cotton used in production must be imported from the United States.

Mahmud Hasan Khan, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), shared this information at a press conference held yesterday at the BGMEA headquarters.

The press conference, chaired by Mahmud Hasan Khan, was attended by BGMEA Senior Vice President Inam ul Haque Khan (Babul), Vice Presidents Md. Rezaowan Selim, Md. Shihab Uddoza Chowdhury, Vice President (Finance) Mizanur Rahman, Directors Shah Raeed Chowdhury, Mohammad Abdur Rahim, Faisal Samad, Md. Hasib Uddin, Mohammad Abdus Salam, Nafis-ud-Doula, Majumdar Arifur Rahman, Zowarder Mohammad Hosne Komar Alam, Asef Kamal Pasha, Rumana Rashid, and Samiha Azim.

Mahmud Hasan Khan said, “We found this clause in Trump’s executive order. We have since reached out to the U.S. administration for a more detailed explanation. We are trying to ensure that U.S. Customs enforces this provision because it is extremely important for us. This will help us reduce our production costs. Additionally, the price of U.S. cotton will also decrease.”

The BGMEA President further stated, “About 75% of our U.S. exports are cotton-based garments. According to the U.S. executive order on tariffs, if a minimum of 20% American raw materials (such as American cotton) are used, the additional 20% tariffs will not apply. In other words, using U.S. raw materials will earn us some extra tariff exemptions.”

He added, “We cannot afford to be complacent because the latest U.S. executive order clearly mentions that trade or security agreement negotiations with some countries are still ongoing. Once finalized, these agreements could further reduce tariffs for those countries. Therefore, Bangladesh must continue its negotiations.”