An abrupt hike in US import tariffs is set to cost Bangladesh’s readymade garment (RMG) exporters an additional Tk1,225 crore over the next three months, with industry leaders warning of factory closures, financial distress, and potential worker unrest.
The United States recently raised import duties on Bangladeshi garments from 16% to 26%—an increase of 10%age points—following a revised executive order by the Trump administration.
Although an initial plan to raise tariffs to 37% was shelved, the current increase is still proving crippling for exporters.
Under a hastily brokered compromise, US buyers have agreed to shoulder half of the additional burden, with Bangladeshi manufacturers absorbing the remaining 5%.
However, the implications are severe: factory owners are now facing an unplanned outflow of nearly Tk1,250 crore from their coffers.
According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the US market accounts for roughly $8 billion in annual garment exports.
Given an exchange rate of Tk12,246 crore per billion dollars, this translates to nearly Tk97,968 crore.
Over three months, exports worth Tk24,592 crore will face the increased tariff, resulting in an extra duty payment of Tk2,449.2 crore—half of which falls upon Bangladeshi exporters.
With typical profit margins in the sector ranging from just 2 to 2.5%, many factory owners fear the tariff hike could push them into losses or even insolvency.
Some have already entered into renegotiated contracts with buyers to split the duty increase, but the deals provide little relief.
“The 10% duty hike has pushed us to the brink. Buyers are suspending orders and demanding 5% discounts,” said M Mohiuddin Chowdhury, director and CEO of Clifton Group and a former BGMEA director.
“We're losing nearly Tk1,250 crore in just three months.”
Raqibul Alam Chowdhury, former BGMEA vice-president, echoed similar concerns: “This policy from the Trump administration will make it impossible for many factories to survive. Most of us operate on razor-thin margins due to global competition. Sharing the burden of this tariff hike means there’s nothing left—only losses.”
Several factory owners reported that they are already struggling to pay workers’ wages, warning that further pressure could ignite labour unrest. Many anticipate taking on additional debt to stay afloat, while others fear they will be forced to shut down operations altogether.
“The situation is dire,” one factory owner remarked.
“Without intervention, we’ll see widespread closures. And if that happens, the social consequences could be devastating.”
As the industry grapples with the fallout of the tariff hike, stakeholders have urged the government and international trade bodies to intervene, fearing long-term damage to one of Bangladesh’s most vital economic sectors.
