Bangladesh Gets Slight Tariff Edge Over China, Vietnam in US Apparel Market

Refayet Ullah Mirdha, Dhaka — Bangladesh will get a small benefit in garment exports to the US as its effective final tariff rate is slightly lower than those faced by China and Vietnam — two major competitors in the global apparel supply chain — according to data verified by Research and Policy Integration for Development (RAPID).

The US on 24 July 2026 imposed a new 10 percent duty on exports from Bangladesh to the American market, citing imports of goods produced with forced labour. With that, Bangladesh's effective tariff rate now stands at 25.6 percent. Despite the increase, Bangladesh retains a competitive tariff advantage over its main rivals.

📊 Comparative US Tariff Rates

An effective tariff rate is the overall import duty after taking into account all applicable US tariffs and surcharges on a product. The current comparative rates:

• 🇧🇩 Bangladesh: 25.6 percent (including new 10% forced labour duty)
• 🇻🇳 Vietnam: 28.1 percent
• 🇨🇳 China: 35.6 percent (including 7.5% surcharge imposed in 2020)
• 🇮🇳 India, Indonesia, Pakistan, Cambodia: 25.6 percent (same as Bangladesh)

The tariff rates were verified by Research and Policy Integration for Development (RAPID), a research organisation based in Dhaka, using data from the Tariffs Tool — a resource for estimating US import duties and understanding the tariff landscape.

⚠️ Why the Benefit May Be Limited

While the lower rate compared with China and Vietnam gives Bangladesh a competitive advantage, local garment exporters and economists say the benefit may be limited because:

• ⚠️ The difference is not large — only 2.5 percentage points vs Vietnam, 10 percentage points vs China
• ⚠️ The ongoing energy crisis is affecting production and shipments
• ⚠️ The broader tariff increase means buyers will seek to absorb cost through price reductions or supplier cost-sharing
• ⚠️ The US tariff policy uncertainty — with rates changing frequently
• ⚠️ Buyers consider total landed cost, not tariff alone

👥 Industry Reactions

AK Azad, Chairman of Ha-Meem Group, which ships the majority of its garments to the US, said the lower effective tariff rate could benefit Bangladesh, although the domestic energy crisis is affecting production. Azad said that US retailers are not considering the duty but are instead asking for timely shipment of goods as production at industrial units is being affected.

"The government should resolve the energy crisis soon so that the local exporters can enjoy the benefit of lower rate to the American market," he added.

MA Razzaque, Chairman of RAPID, said that US tariff policy remains uncertain as the current US administration changes the rates frequently. "Moreover, the difference in tariffs on Bangladesh compared with China and Vietnam is not too much. So, Bangladesh may not benefit much from the lower tariff rate compared to its key competitors in the US market," he said.

📊 Strategic Concern: Connector Destinations

Razzaque raised a critical strategic concern: China has created connector destinations such as Vietnam and Mexico through which it can do good business by producing garments and shipping them to the US. Bangladesh has no such connector destinations yet. This means:

• 🇨🇳 China's apparel exports: can route through Vietnam or Mexico to access US market at lower tariffs
• 🇧🇩 Bangladesh's apparel exports: must ship directly, facing the full 25.6 percent tariff
• 🌏 Strategic implication: China's transhipment strategy partially offsets its higher direct tariff

"But it is true that numerically, Bangladesh's tariff is lower than China and Vietnam, which matters less now," Razzaque said — a candid assessment that the numerical tariff advantage may not translate into meaningful market share gains.

🏛 BGMEA's Position

Inamul Haq Khan, Senior Vice-President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), is hopeful that Bangladesh will benefit from the lower tariff. However, he also acknowledged that the energy crisis has been affecting production significantly.

Garment exports from Bangladesh to the US totalled $4.01 billion in the January-June period of 2026, down 5.75 percent year-on-year, according to data from the Export Promotion Bureau. Inamul said that although shipments to the American market are gradually rebounding recently, Bangladesh's garment exports to the US might not increase much because of the lower rate.

🌏 Total Landed Cost Perspective

Mohiuddin Rubel, founder and CEO of Bangladesh Apparel Voice, said buyers look at the total landed cost of garments rather than tariffs alone. "The rate advantage only becomes a lasting one when we manage our capabilities better than competitors," he said. That means securing:

• ⚡ Adequate energy supply — addressing the gas and power crisis
• 🚢 Efficient port handling — reducing logistics costs and turnaround times
• 💰 Other cost controls — managing production and overhead costs
• 🧵 Shift towards non-cotton products — diversifying fibre sourcing
• 👥 Use of Bangladesh's clean record — leveraging compliance credentials

📊 Strategic Context

The slight US tariff edge over China and Vietnam comes at a critical juncture for Bangladesh's apparel sector:

• 📊 FY26 RMG net earnings: only 0.96% growth to $38.97 billion
• 📊 EU apparel exports: fell 16.4 percent in H1 2026
• 📊 660 textile mills affected by gas shortage
• 📊 LDC graduation: November 2026 (will lose EU EBA preferential access)
• 📊 REER at 103.93: Bangladesh Taka overvalued, weakening export competitiveness

With the EU market contracting for Bangladeshi apparel exports and the LDC graduation transition approaching, the US market has become strategically critical for Bangladesh's apparel sector. The 25.6 percent effective tariff — while lower than China and Vietnam — still represents a substantial cost burden that will need to be absorbed across the supply chain.

🌏 Strategic Implications

Bangladesh's slight US tariff edge carries several strategic implications:

• ✅ Numerical advantage: 25.6% vs 28.1% (Vietnam) and 35.6% (China)
• ⚠️ Limited practical benefit: energy crisis constrains production capacity
• ⚠️ No connector destinations: Bangladesh lacks transhipment strategy of China
• ⚠️ US tariff policy uncertainty: rates change frequently under current administration
• 💰 Buyer price pressure: 10% duty increase likely to be passed back to suppliers
• 📊 Total landed cost matters: tariff advantage alone insufficient

The Bangladesh apparel sector's ability to translate the slight US tariff advantage into actual market share gains will depend critically on resolving the energy crisis, improving port efficiency, diversifying fibre sourcing, and managing production costs — all of which are structural challenges that the country must address through the LDC graduation transition period. Without these complementary improvements, the numerical tariff advantage over China and Vietnam may remain a theoretical benefit rather than a meaningful commercial advantage.