Additional waiver of tariffs on US-sourced raw materials
To be eligible for the exemption, a minimum of 20% of the cotton used in production must be sourced from the United States.
Bangladesh to Receive Partial Tariff Exemptions on US-Bound Garments Made with American Cotton
Bangladesh will benefit from partial tariff exemptions on garment exports to the United States if the products are manufactured using U.S.-origin cotton. This provision is included in President Donald Trump’s latest executive order on counter-tariffs, issued on July 31.
To qualify for the exemption, at least 20% of the cotton used in production must be imported from the United States.
Mahmud Hasan Khan, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), disclosed the development at a press conference held yesterday at the BGMEA headquarters in Dhaka.
The press briefing, presided over by Mahmud Hasan Khan, was attended by BGMEA Senior Vice President Inam ul Haque Khan (Babul), Vice Presidents Md. Rezaowan Selim and Md. Shihab Uddoza Chowdhury, Vice President (Finance) Mizanur Rahman, and Directors Shah Raeed Chowdhury, Mohammad Abdur Rahim, Faisal Samad, Md. Hasib Uddin, Mohammad Abdus Salam, Nafis-ud-Doula, Majumdar Arifur Rahman, Zowarder Mohammad Hosne Komar Alam, Asef Kamal Pasha, Rumana Rashid, and Samiha Azim.
“We discovered this clause in President Trump’s executive order and have since engaged with the U.S. administration seeking further clarification,” said Mahmud Hasan Khan. “We’re working to ensure U.S. Customs enforces this provision, as it holds significant importance for our industry. It will help us reduce production costs, while the increased demand could also drive down the price of U.S. cotton.”
He added that approximately 75% of Bangladesh’s garment exports to the U.S. are cotton-based. “According to the order, if at least 20% of the raw materials—such as cotton—used in production are sourced from the U.S., the additional 20% tariff will not be imposed. In essence, using U.S. cotton gives us access to crucial tariff relief.”
Mahmud Hasan Khan cautioned against complacency, noting that the executive order indicates ongoing trade and security agreement negotiations with other countries. “Once those deals are finalized, they may receive even more favorable tariff treatment. Bangladesh must therefore remain proactive in its engagement and negotiations with the U.S.”
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