The United States has proposed a 40% local value addition threshold for Bangladeshi exports as a key condition for potential tariff relief, industry leaders revealed Saturday, following inconclusive talks in Washington.

Leaders from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) disclosed the demand during a briefing with the Dhaka Reporters’ Unity in Uttara.

The US side raised the issue as part of ongoing efforts to address the trade imbalance, particularly as Bangladesh seeks duty-free access to the American market for garments made from US cotton.

Exporters argue this would boost US cotton imports while narrowing the trade gap.

BGMEA President Mahmud Hasan Khan said the 40% value addition requirement is not final, but it poses a major concern.

“If enforced, it will severely impact Bangladesh’s woven exports to the US,” he warned, though knitwear and denim may remain less affected.

BKMEA President Mohammad Hatem called the negotiations “fruitful,” but said key points remain unresolved. Both leaders urged the government to include exporters in high-level discussions to avoid missteps and align on national trade interests.

Exporters also criticised the recent imposition of a 2% advance income tax (AIT) on cotton imports, Bangladesh’s central US import, as contradictory to calls for reducing the trade deficit.

Meanwhile, apparel exports to the US fell 28% in May 2025 from April, following an additional 10% tariff under the Trump administration. Some buyers, including Walmart, have halted or delayed orders, intensifying concerns in the sector.