US Tariff on Clothing from Bangladesh

Bangladesh is the world's second-largest clothing exporter (after China) and was among the biggest beneficiaries of the SCOTUS ruling that struck down IEEPA tariffs. The total tariff dropped from approximately 53.5% to 26.5%.

The current rate structure: 16.5% MFN base rate + 10% Section 122 = 26.5%. Before the SCOTUS ruling, Bangladesh faced a punishing 37% IEEPA reciprocal tariff on top of the MFN rate, making the total approximately 53.5%. The reduction of 27 percentage points is transformative for Bangladeshi garment exporters and their US import partners.

Bangladesh specializes in basic and mid-range garments: T-shirts, polo shirts, trousers, denim, sweaters, and jackets. The country's garment industry employs over 4 million workers and accounts for over 80% of Bangladesh's total exports. Major brands sourcing from Bangladesh include H&M, Walmart, Zara, and Primark.

At 26.5%, Bangladesh's rate is identical to Vietnam and India, and well below China's 34%. Mexico (0% USMCA) remains the lowest option. Bangladesh's primary competitive advantage is its extremely low labor costs — among the lowest in Asia — which make it the most cost-effective option for basic, high-volume garments even with the 26.5% tariff.

The garment industry has invested in improved safety standards following the Rana Plaza tragedy, with the International Accord on Fire and Building Safety covering most major factories. Sustainability certifications and green factories are increasingly common.

Key risks: the Section 122 expiry (~July 24, 2026) could further reduce rates. However, new Section 301 investigations launched March 11 could potentially target Bangladesh. Infrastructure limitations (port congestion at Chattogram) and lead times (35-45 days shipping) remain considerations.