Bangladesh May Face a Bigger Tariff Bill Than Thought
That figure alone would be bad enough. But Rubel, an additional managing director at Denim Expert, a jeans manufacturer, also pointed out a clause under the section on implementation: 'The rates of duty established by this order are in addition to any other duties, fees, taxes, exactions or charges applicable to such imported articles,' except as provided in subsections relating to Canada and Mexico.
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The South Asian nation's goods are already subject to U.S. tariffs, including a 15.6 percent duty on apparel. An additional 37 percent hike would mean a tariff of of nearly 53 percent, on par with the 54 percent being levied on China—that is, unless Trump makes good on his most recent threat to slap another 50 percent in import taxes on the superpower if it doesn't withdraw its own 34 percent increase.
For the world's second-largest—or third-largest, depending on how Vietnam is doing—exporter of garments after China, this would be an impossible burden to bear. The United States, its third-biggest trading partner after China and India, imported $8.4 billion worth of goods in 2024 alone, according to the Office of the U.S. Trade Representative. And despite existing tariffs, Bangladesh is the third-largest supplier of clothing after China and Vietnam to the United States. The new presidential calculus could change that status dramatically.
The White House did not respond to a request for clarification first thing Monday morning. A representative from the American Apparel & Footwear Association, a trade group that represents such household names as Adidas, Gap Inc. J.Crew Group, H&M Group and Zara owner Inditex, however, affirmed that any new tariff rates going into effect on April 9 will be in addition to prevailing ones.
Already, fashion brands are going into defense mode, though the AAFA did not respond to a query relating to what its members are doing. One supplier, who requested anonymity because of concerns about retaliation, said that Gap, Levi Strauss & Co. and Walmart are freezing most of their shipments until April 10. Gap, the supplier continued, has also asked its supply-chain partners to bear the cost of the tariffs. In a note viewed by Sourcing Journal, a logistics company handling freight for Calvin Klein and Under Armour licensee Centric Brands asked vendors to pause shipments 'until further notice.' Both Gap and Levi's said their parts in this account weren't accurate, without elaborating further. Centric Brands and Walmart did not respond to emails seeking confirmation.
'Factory owners are now afraid of cancellation, but no official cancellation has come yet,' the manufacturer said. 'In the past seven months alone, over 50 small and medium-sized factories have shut down in Bangladesh. If additional tariff charges are finally imposed on Bangladeshi garment manufacturers, it will exacerbate the already critical financial stress. This could give a real hard time to many well-performing factories and have a direct negative impact on the livelihoods of thousands of workers.'
Rubel agreed. He, too, is seeing requests for cost-sharing, if not the complete absorption of the tariffs, start to trickle in, squeezing suppliers' already sliver-thin margins. They'd be difficult to accede to without putting factories further into the red. In a study of the Bangladesh garment landscape by the University of Aberdeen Business School and the fair-trade nonprofit Transform Trade, for instance, 76 percent of the 1,000 manufacturers surveyed said that order prices did not increase between March 2020 and December 2021 despite the rising cost of energy and materials. More damningly, 8 percent of respondents said they were producing clothes for less than they cost to make, even for the profitable likes of C&A, H&M and Inditex.
Of Bangladesh's largest apparel buyers that sell into the United States, only The North Face parent VF Corp. responded to say that it hasn't paused or canceled orders in Bangladesh, though it declined to comment further, citing a quiet period before its earnings announcement.
H&M and Inditex both said they didn't have information to share on the matter, while Puma said it is 'currently monitoring the situation' and has not made any decisions. Likewise, Lidl begged off answering, saying it 'cannot comment on such a complex topic on such a short notice.'
Companies such as C&A, Aldi, Tommy Hilfiger owner PVH Corp., Uniqlo owner Fast Retailing, The Children's Place, Cotton On, Esprit, Kohl's, Wrangler owner Kontoor Brands, Mango, Next, Target, Tesco, T.J. Maxx operator TJX and Tom Tailor, in addition to Walmart, did not respond to questions about their next moves.
Many are likely taking a wait-and-see approach. Bangladesh, like other countries swept up in the 'America First' current, are hopeful that negotiations are still possible despite Commerce Secretary Howard Lutnick telling CBS News' 'Face the Nation' on Sunday that the administration plans to stay the course until Wednesday, saying that 'there is no postponing. They are definitely going to stay in place for days and weeks' and that 'the president needs to reset global trade.'
Muhammad Yunus, the Nobel Peace Prize laureate who has been helming Bangladesh's caretaker government, asked Trump in a letter dated Monday to reconsider the reciprocal tariffs. While the White House says that Bangladesh has imposed 74 percent in tariffs on the United States, the number is under dispute, particularly since many U.S. products, including agricultural commodities and scrap metal, enter Bangladesh duty-free. Yunus said that the government is working on halving tariffs on top U.S. export items such as gas turbines, semiconductors and medical equipment. The country is also removing an 'array of non-tariff barriers' to U.S. exports, such as certain testing, labeling and certification requirements to simplify customs procedures, he said.
Asking Trump to postpone the implementation of the reciprocal tariff by three months, Yunus said that Bangladesh plans to 'significantly increase' imports of U.S. farm products, including cotton, wheat, corn and soybeans. 'To increase speed to market of U.S. cotton, we are finalizing dedicated bonded warehousing facility in Bangladesh where they will have duty-free access,' he added.
But whether Bangladesh will be able to get a last-minute reprieve is anybody's guess. Anticipating the far-reaching effects the tariffs would have on Bangladesh, for which garments make up more than 85 percent of exports, BGMEA administrator Md. Anwar Hossain similarly appealed to global buyers, saying that it's only through 'solidarity and collaboration [that] we will be able to address these challenges effectively.'
''We fully recognize that this has created pressure at your end. The uncertainty surrounding cost structures, supply chain planning and long-term sourcing decisions is significant, and we acknowledge your circumstances with utmost sincerity,' he wrote in a letter also dated Monday. 'We are aware that several brands and retailers have already reached out to their Bangladeshi suppliers, expressing concern, and in some cases, discussing possible measures to mitigate the impact.'
Still, Anwar cautioned patience and urged brands and retailers' continued support until a 'peaceful resolution' can be reached. 'We understand the urgency, but transferring the burden downstream to suppliers at this early stage will only exacerbate the stress,' he added.
Nazma Akter, president of the Sommilito Garments Sramik Federation, an IndustriALL Global Union affiliate, is likely fearful, writing in a press release that many Bangladeshi suppliers may be forced to withdraw from the American market and, in so doing, result in massive layoffs that will result in widespread unemployment and an increase in harassment and violence. The livelihoods of 4 million workers, many of them women without alternative forms of employment, she said, are 'now at extreme risk and face deep uncertainty.'
'We urge the government of Bangladesh to address this matter with the utmost diplomatic importance, engage in dialogue with the U.S. government, and seek an acceptable resolution,' Akter said. 'At the same time, we call for urgent steps to ensure social protection and alternative employment for affected workers.'
The Trump administration rescinding the higher tariffs aside, brands and retailers also have a 'vital role' to play in staving off a crisis at a fraught time for Bangladesh's national progress, she added.
'They must ensure that the burden of price hikes does not fall on workers' wages and on the industry,' Akter said. 'For the sake of workers' secure livelihoods, brands and buyers must practice transparency. In this situation, only buyers can absorb the impact of price increases in a way that still ensures workers receive their fair dues.'
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