Even 5% US tariff is too much for Bangladesh apparel industry: CPD

Fibre2Fashion

28-07-2025

It will be tough for Bangladesh's apparel industry to absorb even a 5-per cent additional tariff on the freight on board (FOB) price as it comes at a time of global economic uncertainty, soaring interest rates and rising energy costs, a recent study by the Centre for Policy Dialogue (CPD) revealed.
The impact will be especially severe for small and medium enterprises (SMEs), which operate on razor-thin margins, the study, titled 'Trump Reciprocal Tariffs and Bangladesh: Implication and Response', cautioned.
Bangladesh's apparel industry will find it tough to absorb even a 5-per cent additional tariff on the FOB price as it comes at a time of global economic uncertainty, soaring interest rates and rising energy costs, a think tank study revealed. The impact will be especially severe for SMEs. The think tank criticised Dhaka for not contesting the non-disclosure clause in the US-proposed tariff framework.
The CPD study argues that the tariffs reflect Washington's broader strategic calculus, including geo-economic and geo-strategic realignments in the Indo-Pacific.
"Bangladesh will need to navigate all these complex issues by considering its trade interests with the USA and also by taking into cognisance the implications of its response for the country's bilateral relationships with other countries, its own geo-strategic priorities, and also its multilateral obligations, particularly as a member of the World Trade Organization," the study report said.
The CPD report criticised the government for not contesting the non-disclosure clause in the US-proposed tariff framework and for failing to mobilise a negotiation team.
Despite the softening of the stance by US President Donald Trump—indicating reduction of reciprocal tariffs from the initial 37 per cent—businesses are already witnessing disruption, global supply chains are being adversely affected and orders are being delayed or held back.
"These are being felt by Bangladesh as well. Brands and buyers are asking Bangladesh's producers and exporters for discounts. This is particularly pertinent for the apparel sector of the country," the report noted.
Foreign buyers are also tightening compliance requirements in environment, labour standards and carbon emissions.
Fibre2Fashion News Desk (DS)