United States cotton exports to Bangladesh set to escalate, with a projected value of $1 billion, according to the Bangladesh Textile Mills Association (BTMA)
Bangladesh, a major player in the global textile industry, has announced plans to significantly increase its cotton imports from the United States. The aim is to boost trade ties with the US and reduce the existing trade deficit between the two nations.
Reasons Behind the Decision
The surge in Bangladesh's ready-made garment (RMG) exports to the US has increased the demand for high-quality raw materials like US cotton. With the goal of balancing the trade deficit, which currently stands at a significant $6 billion, Bangladesh aims to diversify its cotton sources, increasing the share from the US from about 7% to nearly 20%. This aligns with the country's ambition to source 25% of its total cotton from American growers by 2028.
The US and Bangladesh recently negotiated tariff reductions from 35% to 20%, encouraging increased trade and imports. Additionally, Bangladesh seeks special tariff benefits for apparel made from US cotton, which would further promote the use of these imports.
Positive Impacts
Increasing US cotton imports can help lower the trade deficit between the two countries. It can also support the growth of Bangladesh's textile and garment sectors by ensuring access to consistent, quality cotton supplies needed for export growth.
However, the higher cost of US cotton may increase production costs unless mitigated by government support or strategic marketing efforts. Bangladesh may also gain preferential treatment under new US tariffs for garments made with US cotton.
Government Support
The Bangladesh government has been urged by the Bangladesh Textile Mills Association (BTMA) to provide support to cotton importers to offset the relatively higher cost of US cotton, making increased imports feasible. The government aims to support importers through policy facilitation and by leveraging negotiated tariff reductions. Strategic marketing, better price negotiation, and promoting "Made from US cotton" labels are also encouraged to fully capitalize on these trade opportunities.
Looking Ahead
The increased cooperation between Bangladesh and US institutions, as well as the increased cotton imports, is expected to have positive impacts on the textile sector and bilateral trade. However, it is contingent on the government's support to manage costs and ensure the viability of the increased imports. The BTMA's ambitious plan to more than triple the amount of cotton imported from the US, to $1 billion, was announced on August 6.
The Bangladesh government is encouraged to support cotton importers to offset the higher cost of US cotton, allowing for increased imports to reach the ambitious goal of $1 billion by a BTMA plan announced on August 6. This massive increase in US cotton imports is aimed at boosting the growth of Bangladesh's textile and garment sectors, catering to the increased demand from their ready-made garment exports to the US, while also reducing the existing trade deficit between the two nations.
){kind=link}