"US retailers lean on suppliers to absorb tariffs", 4 August 2025

American clothing brands and retailers are pressing their Bangladeshi suppliers to absorb a portion of new tariffs levied by the Trump administration, squeezing the already thin margins of garment exporters.

The new tariffs, effective from August 7, come on top of existing duties, creating a complex and costly environment for exporters and importers. For many common apparel items, the effective tariff rate will now surge to 36.5 percent, combining the new 20 percent levy with an existing 16.5 percent duty...

Across the industry, Bangladeshi garment manufacturers are systematically asked to absorb a portion of the new tariff costs by reducing their prices...Some retailers asked for adjustments equivalent to a quarter of the new cost.

This move mirrors the strategy employed by buyers when a preliminary 10 percent baseline tariff was introduced on April 9. That levy..., now replaced by the new 20 percent rate, also saw retailers successfully push suppliers to share the cost.

"We have little to say and many of us have been accepting the buyers' demand, although the profit is squeezed to 3 to 4 percent. We are against the wall," said AK Azad, chairman of Ha-Meem Group, a major apparel supplier to the US. He said some buyers are demanding both a share of the tariff cost and a general price reduction.

The situation places exporters in a precarious position, forcing them to choose between eroding their profitability and risking long-term business relationships. "My buyers are requesting me to bear up to 5 percentage points of the additional tariff," said Sharif Zahir, managing director of Ananta Group...

Ramzul Seraj, managing director of Elite Garments, said he had already been absorbing a portion of the initial baseline tariff. His buyers have not asked him to shoulder more.

However, some retailers are also adjusting prices for the end consumers to offset the higher import costs. Seraj said a higher-end woven shirt his factory sells for $10, which previously retailed for $65 in the US, is now being marked up to $70. He added that buyers may slightly increase the price they pay him to compensate.

The pressure from retailers appears to be a temporary measure for some, designed to bridge the gap until the new costs can be fully integrated into their pricing models...

Despite the squeeze on margins, exporters are reporting a positive development: work orders, which had been pending amid uncertainty over the final tariff rate, are now flowing back. "The buyers are taking all the pending work orders after the announcement of the new tariff rate," said Zahir...