Bangladesh Intends to Increase Imports of American Cotton to Avoid a 20% Tariff Imposition, according to the Head of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA)
Bangladesh garment exporters can now avoid a 20% reciprocal tariff on exports to the United States by using at least 20% of the product's total value from US-origin raw materials, specifically US cotton. This move is aimed at evading the tariff and is a result of an executive order enacted in 2025.
At a press conference held at the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) office, BGMEA president Mahmud Hasan Khan Babu announced these developments. He expressed gratitude towards the US government for announcing a balanced tariff structure.
The 20% threshold relates to the customs value of the garment product, meaning that the value of raw materials of US origin must be 20% or more of the total product value. Only the US-origin portion benefits from the duty exemption; the remainder of the garment made from non-US materials is still subject to import duties.
The main US raw material targeted is US cotton, as about 75% of Bangladesh’s US exports are cotton-based garments. BGMEA is encouraging Bangladeshi producers to increase imports of US cotton to meet this condition and obtain the tariff waiver.
Discussions will be held with the negotiators to determine if there are conditions for value addition. It is necessary to confirm who will certify the use of US cotton and how the process will be executed. The exact conditions under which the tariff was lowered from 35% to 20% are not yet known.
The interim government's leadership, particularly the commerce and security advisers, are praised for steering Bangladesh away from a potential crisis. Following the latest outcome on tariffs, some US buyers have resumed RMG orders.
The use of US cotton in Bangladesh's garment production could give an edge over competitors, as many main competitors do not use US cotton. This move puts Bangladesh on more equal footing with key competitors, with a lower tariff than China's 30% and India's 25%.
Inamul Haq Khan, Md Rezwan Selim, Mijanur Rahman, and Md Shehab Udduza Chowdhury were also present at the press conference. The negotiations are ongoing, and the BGMEA has already started the process of using more US cotton in making garments.
[1] Tariff Update: Bangladesh to Avoid US Tariffs with Increased Use of US Cotton (2025) [2] US Customs and Border Protection: US Content Origin Rules (2025) [3] BGMEA Press Release: Increased Use of US Cotton in Garment Production (2025) [4] BGMEA Encourages Increased Imports of US Cotton (2025)
- The increase in the use of US cotton in Bangladesh's garment production, as encouraged by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), could provide a competitive edge, given that many main competitors do not utilize US cotton.
- In an attempt to evade the 20% reciprocal tariff on exports to the United States, Bangladesh garment exporters are now focusing on using at least 20% of the product's total value from US-origin raw materials, with a particular emphasis on US cotton. This move is in line with developments announced at a press conference held at the BGMEA office.
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