The Investor Desk | August 4, 2025

Edited by Mizanur Rahman Liton

Bangladesh’s readymade garment (RMG) industry—the backbone of its export economy—is facing a dangerous new squeeze, as US buyers impose unbearable pricing pressure in response to new tariffs.

Effective August 7, Bangladeshi garments entering the US will now face an effective duty of 36.5%, combining a new 20% reciprocal tariff with the existing 16.5% duty. But the real crisis lies elsewhere:

US retailers are shifting the entire cost burden onto Bangladeshi suppliers.

Exporters are being forced to lower prices and absorb up to a quarter of the new tariff.

Profit margins are collapsing, in some cases to below 3%.

“We have little to say. Most of us are forced to accept buyers’ demands. We’re up against the wall,”

— AK Azad, Chairman, Ha-Meem Group

This marks the second time in less than six months that Bangladeshi suppliers are being squeezed in silence. When the 10% baseline tariff was introduced in April, retailers successfully offloaded part of the cost onto exporters. Now, that 10% has simply been replaced by a 20% levy—and the exploitation continues.

“Buyers are requesting me to absorb 5 percentage points of the additional tariff,”

— Sharif Zahir, MD, Ananta Group

This is not negotiation. It’s coercion, with American buyers using their market power to force cost absorption. No support is coming from the Bangladeshi government or trade associations. BGMEA has received no formal complaint, likely because these deals are being done behind closed doors.

In practice, this means:

No pricing power for suppliers

No protection against losses

No clear exit from this squeeze

Even large-scale, high-end factories are not spared. Elite Garments, for instance, is still absorbing earlier tariffs. Now, a $10 woven shirt that used to retail for $65 is being marked up to $70 in the US. But exporters see none of that margin.

The sector is entering a period of systemic vulnerability, with uncertain futures for:

Profitability

Worker retention

Investment confidence

Export growth

There is no relief in sight. Even temporary support measures, such as tariff-sharing “until February 2026,” do nothing to address the root crisis: Bangladesh’s total dependence on price-sensitive, low-margin US buyers.

 Key Investor Risks:

Earnings erosion: Exporters’ margins dangerously low, with no short-term recovery in sight

Buyer dominance: Zero leverage in pricing negotiations

Unstable export outlook: Tariff uncertainty may hit future planning and working capital

Silent crisis: No coordinated industry or government response so far

Bottom Line for Investors:

The Bangladesh RMG sector is in a fragile state. The US tariff shock has exposed the industry's dangerous overdependence on American buyers and its inability to protect margins. Without external support or structural change, the sector may face mass-scale financial distress.