The recent threat by U.S. President Donald Trump to impose a 35% tariff on imports from Bangladesh has sent shockwaves through the country’s crucial garment sector, with immediate effects already being felt in the supply chains of global retailers like Walmart. Bangladesh, the world’s third-largest exporter of apparel to the United States, relies on its garment industry for 80% of export earnings and 10% of its GDP. As the August 1 deadline for the proposed tariff hike approaches, uncertainty is mounting among manufacturers, suppliers, and workers alike.
Several Walmart suppliers have already put orders from Bangladeshi garment factories on hold, citing the tariff threat. According to factory owners and correspondence reviewed by Reuters, orders for millions of garments—including nearly one million swim shorts for Walmart—have been paused. Classic Fashion, a major buying agent for Walmart, instructed Patriot Eco Apparel, a leading Bangladeshi manufacturer, to halt production pending resolution of the tariff issue. “We are holding Bangladesh production for the time being and in case the tariff issues are settled, then we will continue as planned,” Classic Fashion wrote in a letter to Patriot Eco Apparel.
The uncertainty has also affected negotiations for future orders. One Dhaka-based factory owner reported that an importer negotiating a spring 2026 order of trousers for Walmart asked to delay confirmation by a week, pending clarity on the tariff situation.
Bangladesh’s Garment Sector Faces Major Disruption:
The threat of a 35% tariff comes at a critical time for Bangladesh’s garment sector. The country exported $7.6 billion worth of apparel to the U.S. in the last fiscal year, accounting for over 17% of its total exports. The U.S. is Bangladesh’s single largest export market, making any change in trade policy potentially devastating for the industry and the broader economy.
Factory owners warn that if the tariffs take effect, they will be unable to absorb the additional costs, leading to a sharp decline in orders from U.S. retailers. “If the 35% tariff remains for Bangladesh, that will be very tough to sustain, honestly speaking, and there will not be as many orders as we have now,” said Mohiuddin Rubel, managing director at Denim Expert Ltd, a major jeans manufacturer in Dhaka. Rubel added that while large companies might survive the impact, small and medium-sized manufacturers would struggle to stay afloat.
Retailers have already begun front-loading orders in anticipation of higher tariffs, but this is only a temporary measure. Levi’s, another major U.S. clothing brand, reported that it has secured 60% of the inventory it needs for the remainder of 2025, reflecting broader industry efforts to mitigate short-term supply disruptions.
Negotiations and Industry Response:
In response to the looming tariff hike, a Bangladeshi delegation is currently in Washington, D.C., seeking to negotiate a lower tariff rate and more favorable trade terms. The talks are also addressing the U.S. demand for a minimum 40% local value addition for garments labeled “Made in Bangladesh,” a threshold that presents additional challenges for the country’s woven garment sector.
Bangladeshi officials remain hopeful that ongoing discussions will yield a positive outcome. “There has been good progress in the discussions. Meetings will continue today. Hopefully, something positive will come out of it,” said Energy Adviser Fauzul Kabir Khan. The government is also pushing for a relaxation of the “Rules of Origin” requirement to help local manufacturers meet U.S. standards and maintain their competitive edge.
Meanwhile, industry leaders are exploring alternative markets to offset potential losses in the U.S. Patriot Eco Apparel’s managing director, Iqbal Hossain, said that if the U.S. tariff is implemented, he may seek more orders from European clients, even if it means reducing prices to stimulate demand.
Broader Economic and Social Implications:
The livelihoods of millions of workers as well as the nation’s garment industry are at risk due to the possible imposition of a 35% tariff on Bangladeshi apparel exports to the United States. Any large decline in export orders might have serious social and economic consequences because the apparel business supports countless families and employs millions of people.
Industry insiders warn that the combined effect of higher tariffs and stricter value addition requirements could undermine Bangladesh’s position as a leading global apparel exporter. The U.S. has also expressed concerns over rising Chinese investment in Bangladesh’s garment sector, prompting additional scrutiny and complicating trade negotiations.
As the August 1 deadline draws near, the entire supply chain—from factory workers in Dhaka to retail shelves in the U.S.—remains on edge. The outcome of ongoing negotiations will determine whether Bangladesh’s garment sector can weather this latest challenge or faces a period of painful adjustment and contraction.
For now, Walmart and other major retailers are watching closely, as the ripple effects of Trump’s tariff threat continue to disrupt one of the world’s most important apparel supply chains.
