The United States has recently announced a 35% tariff on Bangladeshi products—a major blow to our export-driven economy. This decision has sparked concern and discussion among government bodies, private sectors, and trade analysts alike. Such concern is only natural, as the implementation of this tariff will severely disrupt our export trade. The US is Bangladesh’s single largest apparel export market.
In the fiscal year 2024–25, the US accounted for 19.18% of our total apparel exports. Imposing such an abnormal tariff on such a vital and prestigious market is enough to shake the foundations of our export sector. Fears about losing competitiveness in the US market are not unfounded. Since there is still room for negotiation and diplomatic effort, it is crucial to act swiftly and take active diplomatic initiatives to reassess the imposed tariff.
Also Read: How the 35% US Tariff Threatens Bangladesh’s Export Economy
At the same time, we must focus on diversifying export markets, entering new ones, and enhancing the competitiveness of our export-oriented industries. Alongside this US tariff threat, another major challenge looms on the horizon: Bangladesh’s graduation from the Least Developed Countries (LDC) category.
With this graduation, starting from 2029, Bangladesh will lose the tariff-free benefits under the European Union’s Everything But Arms (EBA) scheme. Currently, Bangladesh enjoys duty- and quota-free access to the EU for all products except arms. Once this privilege is gone, Bangladesh will face an average tariff of 12% on exports to the EU—posing significant competitive disadvantages and multifaceted challenges to our apparel exports.
Just as the US is our largest individual export market, the EU is our largest regional trading bloc. It’s important to remember that 62% of Bangladesh’s apparel exports go to the EU and the UK. After LDC graduation, the focus is now on the possibility of entering the EU’s GSP+ scheme. However, there are important technical factors that must be understood clearly.
First, GSP+ eligibility requires the implementation of 27 international conventions. Second, under Article 29 (the safeguard clause), if the EU imports more than 37% of its total GSP-covered goods in any sensitive sector (like apparel, agriculture, or fisheries) from a single country, that country will be deemed ineligible for GSP+. In Bangladesh’s case, the share in apparel already stands at 55%—far above the threshold.
Also Read: US Proposes 40% Value Addition Threshold for Bangladeshi Apparel Exports
The EU is currently reviewing its GSP+ policy, which presents a strategic opportunity for Bangladesh. Now is the time for Bangladesh to advocate for either relaxing or providing alternatives to the 37% threshold, emphasizing our reputation as a reliable, ethical, and sustainable supplier to Europe. This can serve as a strong foundation for diplomatic negotiation.
Another key point is that under the current EBA scheme, Bangladesh enjoys a “single transformation” rule—meaning garments can be exported duty-free to Europe even if the fabric is imported, as long as stitching is done locally. However, under the GSP+ scheme, “double transformation” is mandatory—meaning both the fabric and final garment must be locally produced. While this is feasible in the knitwear sector, it is much more difficult for woven garments, as a large portion of woven fabric is still imported.
In this context, well-planned and timely action is essential. Bangladesh’s Ministry of Foreign Affairs, Ministry of Commerce, and missions in Europe must play active roles. Regular dialogue with the European Parliament, Commission, and think tanks is vital to present Bangladesh’s current realities and positive progress—especially on labor and human rights—backed by evidence-based reports. Domestically, structural reforms in the textile sector and supportive policies must be ensured.
While we cannot control global tariff policies, geopolitics, or market uncertainties, we can control our strategy, diplomacy, and timeliness. If we fail to act now, the future cost could be steep. Falling behind in the export race means not just revenue loss—it threatens the livelihoods of millions of workers.
The writer is Managing Director of TAD Group and former Director of BGMEA.
