US tariff reduction measures applauded by BTMA
In a significant development, the Deputy Chief of Mission at the Embassy of the People's Republic of Bangladesh in Washington, D.C., DM Salahuddin Mahmud, hosted an evening reception. The event was marked by a critical breakthrough for Bangladesh's export competitiveness and bilateral trade relations with the United States.
The recent US tariff reduction on Bangladeshi ready-made garment (RMG) exports from 35% to 20% is expected to improve Bangladesh’s competitive position in the US market and positively impact its textile industry and bilateral trade relations. This tariff reduction helps narrow the gap with regional competitors like Pakistan (19%), Vietnam (22%), and India (25%) while addressing trade tensions and fostering closer economic engagement between the two countries.
For the textile industry, which accounts for around 80% of Bangladesh's export earnings and employs about 4 million workers, the tariff cut provides significant relief amid rising global challenges. It may help secure existing orders and increase competitiveness by lowering cost barriers relative to rival exporting countries, yet industry leaders caution that increases in production costs might offset some benefits.
The new tariff structure offers further incentives: if at least 20% of raw materials used (notably American cotton) originate from the US, certain additional duties can be exempted, encouraging import of US raw materials and fostering bilateral trade synergy.
From a broader trade relations perspective, this tariff adjustment is part of a strategic US policy shift to strengthen ties with Bangladesh and other South Asian partners, reflected in concurrent tariff reductions for countries like Sri Lanka and Pakistan. Bangladesh’s commitments to purchase US Boeing aircraft, wheat, and other agricultural goods, as well as easing import duties on US products, signal deepening economic cooperation beyond textiles.
The commendation for this tariff reduction was made during an official visit to Washington, D.C. The delegation, led by President Showkat Aziz Russell, appreciated Commerce Adviser Sheikh Bashir Uddin and his team for securing a significant reduction in US tariffs on RMG exports. The participating mills include Mosharaf Composite Textile Mills Ltd, Asia Composite Mills Ltd, and Salma Group.
Former US Ambassador to Bangladesh Peter D Haas was also present at the meeting. Senior government officials, including Commerce Secretary Mahbubur Rahman and Additional Secretary (WTO Wing) of the Ministry of Commerce Nazneen Kawshar Chowdhury, were present. National Security Adviser Khalilur Rahman attended the meeting.
Earlier that day, the delegation engaged in a dialogue with the president of the US Chamber of Commerce and representatives from prominent American business entities. American business leaders expressed strong interest in expanding trade and investment with Bangladesh. The Bangladesh Textile Mills Association (BTMA) has commended a significant step forward for the country's textile industry due to a tariff reduction.
During the high-level visit, BTMA member mills reaffirmed their commitment to deepening commercial ties with the US by pledging substantial imports of American cotton. A press release has stated this as a significant milestone.
This tariff reduction marks a crucial step towards strengthening economic diplomacy between Bangladesh and the United States, offering potential benefits to both countries. However, vigilance is needed regarding cost pressures and regional market dynamics to ensure the full benefits of this tariff reduction are realised.
- In light of the recent tariff reduction, the textile industry in Bangladesh anticipates improvements in its competitive position within the US market, as well as a positive impact on bilateral trade relations through increased imports of American cotton.
- The reduction in US tariffs on Bangladeshi ready-made garment exports, alongside commitments to purchase US Boeing aircraft, wheat, and other agricultural goods, signifies a strategic shift in US policy towards fostering deeper economic cooperation and trade synergy with Bangladesh.
