Bangladesh garment makers gain orders on new US tariff

DHAKA — With Bangladesh having secured a lower or equal U.S. tariff rate to its competitors, the country’s garment makers are now reporting increases in orders of as much as 15% amid a reconfiguration of regional supply chains.

The 20% rate is level with Vietnam’s and just one percentage point above Cambodia’s, while much lower than the 30% rate currently applied to global manufacturing hub China — which could rise to more than 50% — and the 50% levy India is looking at from Aug. 27.

Major Bangladeshi apparel maker Ha-Meem Group says that, since U.S. President Donald Trump lowered the country’s tariff from an initially proposed 37%, work orders have risen by around 10%. The company, which has an annual turnover of $930 million, gets 92% of its revenue from exports to the United States.

“Our large investment may have fallen in danger had the Trump tariffs not been slashed,” said Delwar Hossain, Ha-Meem deputy managing director, adding that orders are mainly shifting from China and India.

“Some U.S. buyers or their representatives are now in Dhaka to discuss whether we can take orders for 1 or 2 million pieces additionally.”

Ha-Meem produces some 10 million garments each month and works with major U.S. apparel retailers such as Gap and American Eagle Outfitters.

Shovon Islam, managing director of Sparrow Group, also said a number of buyers are in talks about shifting orders from India, as well as Vietnam.

“My company has some 5% additional orders for spring season,” he said, adding that next summer orders are expected to rise by up to 15%.

Islam said Sparrow has received additional work orders for high-end products that have mainly shifted from China. However, Vietnam is grabbing the majority of such orders given its shared border with China and significantly higher capacity to make these products.

“The market share of China is lessening due to high tariffs,” said Faruque Hassan, managing director of Giant Group.

He believes that had India or Vietnam secured lower tariffs than Bangladesh, or even lower in the case of Cambodia, then there would have been a chance of Bangladesh losing orders to those countries. “Rather, the buyers are now placing the orders to Bangladesh that were put on hold during the past couple of months,” he said.

Hassan, the former president of the Bangladesh Garment Manufacturers and Exporters Association, added that the elimination of the “de minimis rule,” under which shipments up to $800 are allowed to enter the U.S. without requiring duties or extensive paperwork, would also help increase Bangladeshi exports. China — for which the rule has already been eliminated, with the rest of the world following on Aug. 29 — had dominated such exports, while Bangladeshi companies were unable to take advantage due to domestic paperwork requirements, and businesses in the South Asian nation are now expected to compete for orders in this price bracket.

M. A. Salam, managing director of Asian Apparels, said a “positive vibe” has been created among buyers following the U.S. tariffs restructure.

“Bangladesh’s gain from the tariff reshuffle will be clearly visible in the next summer and fall seasons,” he hoped.

Khondaker Golam Moazzem, research director at the Dhaka-based Centre for Policy Dialogue think tank, said Bangladesh will likely remain in an advantageous position with regards to tariffs, and would thus benefit from extra orders at least in the short term.

“The tariff structure suggests that some long-term U.S. policies have been reflected in their preparation. For strategic reasons, the U.S. will maintain some additional tariffs on India and China. That can be called a positive place for us,” he said.

Additional orders have started coming in since the start of the second Trump administration in January, as it has followed previous U.S. President Joe Biden’s policies of trying to blunt China’s economic edge, he said.

“Work orders for Bangladesh may also increase further, and some of them may come from India,” he said.

In fact, Chinese investors have come forward to make fresh investments in Bangladesh’s apparel sector, according to Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association. Some deals have already emerged: On Aug. 11, China-based Kaixi Group signed an agreement with the Bangladesh Export Processing Zones Authority to invest $40 million in the creation of an intimate apparel and accessories production facility.

Feeling upbeat due to this advantageous position, the Bangladeshi government on Aug. 12 set a goods export growth target of 16.5% for the fiscal year ending June 30, 2026. Moreover, commerce chief Sheikh Bashir Uddin has said efforts are underway to lower the U.S. tariff rate to 15% from 20%.

Of Bangladesh’s total exports in fiscal 2024-25, some $8.69 billion worth of goods went to the U.S., representing growth of 18%, according to data from the Export Promotion Bureau.

Still, uncertainty remains. Giant’s Hassan said that some buyers are asking for lower prices to offset the new tariff rate — which compares with the 15% levy from before Trump’s announcement of new duties — while others are asking for suppliers to share the additional costs arising from the “reciprocal” tariffs.

Moazzem is skeptical about the sustainability of additional orders, as higher prices may lessen consumption in the U.S.

“In the short term, sellers may bear the extra prices from their own profits,” he said. “If the high tariffs remain in place for a long time, the U.S. sellers could pass on some of the burden to consumers and suppliers.”

The article appeared in asia.nikkei