Desk Report,
What will be the total tariff on Bangladeshi products under the new countervailing duty?
Donald Trump has reduced the countervailing duty on Bangladeshi products by 20 percent. The White House order states that the countervailing duty will be effective from August 7. The amount of duty to be paid on products exported from Bangladesh to the United States, including the new countervailing duty, has once again come up for discussion.
What will be the total tariff on Bangladeshi products under the new countervailing duty?
According to information published on the website of the US International Trade Commission, the country imported goods worth $8.44 billion from Bangladesh in 2024. The country collected duties of $1.27 billion on these goods. That is, the average duty rate on Bangladeshi products last year was 15 percent. If the new 20 percent countervailing duty is added, it will increase to 35 percent.
However, the effective duty rate will vary depending on the product. Because, currently, the United States collects duties at different rates depending on the imported product. That is, the duty rate is different on each product. The country has been collecting duties from zero to 350 percent depending on the product for so long. That is also changing with the countervailing duties. The US tariff schedule has three types of tariffs. One is the MFN (Most Federated Nation) tariff. This tariff applies to imported goods from countries with which the US has normal trade relations. Usually, member countries of the World Trade Organization get this benefit. Bangladeshi products have an MFN tariff.
The second is the reduced or zero tariff rate provided under the countries with which the US has a trade agreement or the country is providing trade preferences. This rate is usually lower than the MFN tariff. The third is the tariff rate applicable to countries with which the US does not have normal trade relations. This tariff rate is usually higher.
According to the website of the Yale University Budget Lab, the effective average tariff rate of the US on January 20, 2025 was 2.40 percent. It started changing rapidly with Trump’s successive steps. On June 1, it was increased to 15.60 percent. The Budget Lab has predicted that if the new tariff is implemented, it will increase to more than 20 percent.
What will be the total tariff on Bangladeshi products?
The clothing products that Bangladesh exported to the United States last year had tariffs ranging from zero to a maximum of 32 percent. However, the effective average tariff rate on clothing exports was 16.77 percent. If the new counter-tariff is added, the effective average tariff rate on Bangladeshi clothing products will be 36.77 percent.
However, there are many products in the clothing sector. Therefore, each product will have a different tariff rate. According to the US tariff schedule, the US tariff rate on sweaters made of man-made fiber is 32 percent. This tariff rate is applicable to most countries, including Bangladesh. Now, if these products are exported, the total tariff rate will be 52 percent with the counter-tariff added. Again, the tariff rate on sweaters made of cotton yarn is now 16.50 percent. If the countervailing duty is added, it will increase to 36.50 percent. The tariff rate on boys’ underpants made of cotton fabric is now about 6 percent. If the new countervailing duty is added, it will have to be paid at 26 percent. In the apparel sector, there is a 1 percent tariff on some products, but they will have to pay 21 percent.
In addition to apparel, the effective average tariff rate on shoe exports to the United States last year was 8.5 percent. As a result of the imposition of countervailing duty, the effective average tariff could be 28.50 percent. There is a tariff rate ranging from zero to a maximum of 55 percent in this sector, depending on the product.
The effective average tariff on hats and headgear exports is 7.5 percent. Now, if the countervailing duty is added, the tariff rate will increase to 27.5 percent. There is a tariff ranging from zero to 10.5 percent in this sector, depending on the product.
The average effective tariff rate on leather products last year was 12.20 percent. Now, if the countervailing duty is implemented, the rate will increase to 32.20 percent. There are zero to 20 percent tariffs on different leather products. One product in the leather sector is leather handbags. The current tariff rate on exports of the product is 9 percent. After the imposition of the countervailing duty, the total tariff on this product will increase to 31 percent.
