Demand for goods exported to the US from Bangladesh, the world’s second-largest garment producer, has temporarily halted amid the turmoil following the US tariff hike. The Bangladesh government has requested a three-month tax moratorium starting Monday.
Textile and garment manufacturing accounts for about 80 percent of exports in Bangladesh, and the industry is being rebuilt after the sector was hit hard by a student-led revolution that ousted the government last year. US President Donald Trump on Wednesday decided to increase the tax on cotton products in Bangladesh by 16 percent to a new 37 percent tax.
The government said in a statement that the news of the rapid impact came after interim leader Muhammad Yunus urged Trump to “suspend the application of US reciprocal tax measures.” Yunus has written to Trump, asking the interim government to give him three months to smoothly implement his initiative to significantly increase US exports to Bangladesh.
Those products include cotton, wheat, corn, and soybeans, which benefit American farmers. Yunus told Trump, “Bangladesh will take all necessary steps to fully support your trade agenda.” Producers have said the impact is imminent.
Mohammad Mushfiqur Rahman, managing director of Asensor Footwear and Leather Products, said he had received a letter from one of his buyers requesting them to stop shipments. “My buyer has asked me to stop the shipment of leather goods, including bags, belts and wallets worth $300,000, on Sunday,” Rahman told AFP. “He has been a buyer of my goods for a long time. Now we are both confused about this issue.”
Rahman, who has been working since 2008, sends an average of $100,000 worth of goods to the US every month. Bangladesh exported goods worth about $8.4 billion to the United States last year, of which $7.34 billion came from the ready-made garments sector. Bengali daily Prothom Alo quoted AKM Saifur Rahman, CEO of ready-made garment manufacturer Wikitex-BD, as saying that its American buyer had requested to stop the shipment worth US$150,000.
“My American buyer told us that it was not possible to charge additional costs to their customers, and therefore we felt the need to reduce the price,” Rahman said. Mohammad Anwar Hossain, the government-appointed administrator of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said he has sent a letter to American garment buyers requesting an understanding.
“We know that many brands and retailers have reached out to their Bangladeshi suppliers, expressed concerns and, in some cases, are discussing possible measures to mitigate the impact,” Hussain wrote. “We understand the urgency, but transferring the burden to suppliers at this early stage will only increase tensions,” he said. The letter further states, “We humbly request your patience and support during this period as Bangladesh strives for a meaningful solution.”
According to Mohiuddin Rubel, former director of BGMEA, some buyers have already asked to suspend shipments until further notice. “In particular, small buyers are pressuring suppliers to absorb the full tax or share the cost,” Rubel said.
