Reduction Possible with US Cotton Sourcing
The effective tariff on Bangladeshi ready-made garment (RMG) exports to the United States will rise to 36.5%, comprising a new 20% reciprocal tariff on top of the existing 16.5% duty, announced Mahmud Hasan Khan, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
Speaking at a press conference at the BGMEA headquarters, Khan explained that a partial tariff relief may be available if at least 20 percent of the cotton used in manufacturing garments is sourced from the United States.
“The tariff rate will be slightly lower if Bangladeshi garment manufacturers source a portion of their raw materials—particularly cotton—from the US,” he stated.
As an example, he said if 20% of the cotton used in a product is American, the total tariff payable on that product exported back to the US would be reduced proportionally based on the value share of US-origin cotton. Currently, around 75% of Bangladesh’s apparel exports are cotton-based, making the cotton sourcing condition a potentially significant lever for partial tariff mitigation.
The announcement comes as Bangladesh faces mounting pressure following the imposition of the 20% reciprocal tariff on its exports to the US, set to take effect from August 1, 2025, unless ongoing negotiations succeed in altering the terms.
BGMEA’s leadership is currently engaging with stakeholders and urging the government to explore trade diplomacy efforts to soften the impact of these rising trade barriers, which threaten the competitiveness of Bangladesh’s $45 billion apparel export industry.
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