Bangladesh exporters seek compensation as US buyers receive tariff refunds
Bangladeshi garment exporters are seeking compensation from US buyers after sharing part of the tariff burden during the 2025 reciprocal tariff hikes. The demand comes as US importers receive refunds on duties they had previously paid.
Many Bangladeshi exporters had reduced prices or offered discounts to help US buyers absorb the additional tariff costs and protect their orders. Exporters now argue that they should receive some benefit from the refunded duties.
Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), also called for compensation. He said amounts deducted from suppliers to offset tariff costs should be returned in some form from the refunded funds.
However, exporters acknowledge that direct refunds may not always be practical. Some are instead seeking higher order volumes, better prices on future orders or other commercial concessions to recover their losses.
A Dhaka-based garment manufacturer said a US buyer had requested a 5% price reduction during the tariff crisis. The factory agreed to a 1% cut, resulting in a loss of around $25,000. Rather than seeking a direct refund, the manufacturer plans to request higher order volumes from the buyer.
Industry sources said the tariff burden was not shared equally among Bangladeshi exporters. Some buyers did not ask suppliers to reduce prices, while others pushed for significant concessions.
A BGMEA leader estimated that exporters may have absorbed an average of around 10% of the additional tariff burden. He noted that exporters operating under Landed Duty Paid (LDP) terms faced greater exposure because suppliers are responsible for import duties and tariffs under such arrangements.
Mahmud Hasan Khan, President, BGMEA said exporters that absorbed a significant portion of the tariff cost could negotiate with buyers to recover the losses through increased business.
He also said exporters that shipped goods under LDP terms may be able to seek tariff refunds through legal channels in the US.
Notably, more than 90% of Bangladesh's US-bound apparel shipments are believed to be made under FOB terms, while LDP shipments account for less than 10%.
US buyer representatives sourcing from Bangladesh have also acknowledged that suppliers should receive compensation if they had absorbed part of the tariff burden.
However, direct payments could face regulatory challenges. One US brand representative suggested that compensation could instead be provided through higher prices on future orders, increased business volumes or concessions on air freight and other costs.
The issue stems from the US reciprocal tariff regime introduced in April 2025. Bangladesh initially faced an additional tariff of more than 37%, while a 10% tariff was imposed from April 10. The rate was subsequently revised several times before settling at 19%.
Although US importers formally paid the tariffs, some buyers pressured Bangladeshi suppliers to share the additional costs through price reductions and discounts.
The situation has now created a new point of negotiation between Bangladeshi exporters and US buyers, with exporters seeking to recover at least part of the financial burden they carried during the tariff crisis.
