Bangladesh is looking to hold talks with the Trump administration in a bid to lessen the blow from a US decision to impose a 37% tariffs on goods that could devastate the country’s $40 billion garment export industry.

Bangladesh is seeking ways to reduce its trade surplus with the US to help decrease the duty the nation will now have to pay for its exports to America, officials said. The rate on Bangladesh is among the highest Trump imposed on any country, and could cause a shock to one of the world’s poorest nations, which relies heavily on textile exports to support its economy.

“We’re actively exploring opportunities to reduce the gaps,” Sk. Bashir Uddin, Bangladesh’s de-facto trade minister, said in a telephone interview Thursday. 

With garments accounting for nearly 90% of Bangladesh’s total exports to the US, its largest clothing buyer, the stakes are high for the economy. The country is still recovering from a political crisis last year following the ouster of the former leader Sheikh Hasina and is reliant on foreign aid, including from the International Monetary Fund.  

The new tariffs are based on US bilateral trade deficits rather than product-specific criteria, a formula that some analysts said was unfair to many small economies with significant trade surpluses like Bangladesh. 

Bangladesh’s government held talks with key stakeholders, including the Export Promotion Bureau, to assess the tariffs. Among the options to narrow the trade imbalance with the US is to increase imports of American goods like raw cotton, officials said.

“We can increase our imports of cotton from the US market, but we need to establish a reliable supply chain for American cotton,” said Anwar Hossain, administrator of the Bangladesh Garment Manufacturers and Exporters Association.

Major US retailers such as Walmart Inc. and Gap Inc. source billions of dollars’ worth of clothing from Bangladesh annually. A tariff hike could prompt them to reassess sourcing strategies, according to Hossain.

Bangladesh’s exports to the US rose 1.1% to $8.4 billion in 2024 from a year earlier, according to the Office of the US Trade Representative. US exports to Bangladesh declined 1.5% to $2.2 billion, it said.

The tariffs will make it harder for nations like Bangladesh to achieve their respective bail-out program targets set by the IMF, according to Ankur Shukla, a South Asia economist for Bloomberg Economics in Mumbai.

“This could put the fund’s loans to these countries at risk — compounding the downside risk to growth,” he wrote. There is some upside for Bangladesh because its tariffs were set at rates lower than competitors in the garment sector such as Sri Lanka at 44% and Vietnam at 46%, which “could provide a comparative advantage to Bangladesh and help it grab some market share.”

Officials say there may be scope to adjust tariffs as part of reciprocal trade talks. Still, there are “clouds surrounding the US decision,” according to Bashir Uddin, who holds a ministerial rank in the interim cabinet led by Nobel Prize laureate Muhammad Yunus.

“This is not a bilateral issue anymore — it has become a global economic tsunami,” Uddin said.