Bangladesh to double US cotton imports for duty-free access
2025-08-07 16:41:57
Bangladesh to double cotton imports from US
Bangladesh’s textile manufacturers are aiming to double cotton imports from the United States within the next one year, as part of a strategy to secure duty-free access for apparel in the US market and strengthen bilateral trade ties.
The move follows a decision by the Trump administration on 31 July to impose a 20% reciprocal tariff on Bangladeshi goods, effective from 7 August this year. Under the new rules, however, products containing at least 20% US raw materials will qualify for duty-free entry into the United States.
Industry leaders believe that using more American cotton – prized for its superior quality despite higher prices – will not negatively affect the competitiveness of Bangladesh’s ready-made garment (RMG) exports.
According to a White House notice, the revised tariff applies to goods “entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01am eastern daylight time seven days after the date of the executive order, excluding the day the order is signed.”
Over the past five years (2020-024), Bangladesh imported 39.61 million bales of cotton worth $20.30 billion from 36 countries, including the US, Australia, India, Brazil, China, and several African nations. Of this, the United States supplied 2.84 million bales valued at $1.87 billion.
Between January and May 2025, US apparel imports rose by 7.06% year-on-year to $31.70 billion globally. Imports from Bangladesh grew even faster, climbing 21.60% to $3.53 billion.
Calls for policy support and infrastructure
BTMA President Showkat Aziz Russell told Daily Sun that US cotton currently accounts for about 8% of Bangladesh’s imports, but this is expected to rise to 20% within one fiscal year.
He called for government policy support, including the establishment of a dedicated bonded warehouse – at least 500,000 square feet – to store US cotton and reduce the 90-day lead time for shipments from the US.
“The price of US cotton is higher than that from other countries, but its quality is also better. This means there is no adverse impact on export pricing,” said Russell, who is also chairman and managing director of Amber Group.
He urged the government to lower the Export Development Fund (EDF) loan interest rate to 2% for US cotton imports, offer a cash incentive of 3-4 cents per pound, and waive the 1% Advance Income Tax on export earnings.
Quality advantage despite higher costs
US cotton costs 9-12 cents more per pound than Indian cotton, 6-8 cents more than African cotton, 12 cents more than Brazilian cotton, and 5-7 cents more than Australian cotton. However, wastage is lower – just 5-10% compared to 15% for Indian cotton and 12% for African cotton – making it more economical in the long run.
About 75% of Bangladesh’s apparel exports are cotton-based.
Shovon Islam, managing director of Sparrow Group and a former BGMEA director, said his company exports $1.5 million worth of shirts, trousers, women’s tops, and jackets annually to the US.
“As US cotton is of better quality, our products will be better too. Although prices will rise, buyers are willing to pay more for quality,” he said, adding that his firm plans to use US cotton exclusively for garments destined for the American market to maximise duty benefits.
