RMG orders adequate until Christmas

Local suppliers have secured adequate work orders from US clothing retailers and brands to stay busy until Christmas at the end of this year, although the shipments are likely to be subject to Trump's reciprocal tariffs.
The factories will start manufacturing garments in full swing for the Christmas season from June, and it will continue until the end of July.
The shipment of the goods to the US will start from August so that they can be sold in November and December.
The autumn and winter seasons, Christmas, and Thanksgiving are major sales seasons for garments in the Western world.
However, a majority of local garment exporters are still waiting for Trump's final decision on tariffs, as his administration has given a 90-day pause on the reciprocal tariffs on the countries concerned.
Regarding the next summer season's work orders, both suppliers and buyers are yet to hold negotiations to confirm their values and volumes, as retailers and brands are waiting for Trump's final decision.
Like other countries, the 10 percent baseline tariff is still in place for Bangladesh, except for the 145 percent tariff on the import of Chinese goods. Although Trump on Wednesday assured he would consider a substantial reduction of tariffs on Chinese goods, he made it clear it would not be to zero.
Bangladeshi garment suppliers are now busy holding negotiations on work orders to increase export volumes to Europe and other countries because of favourable or zero tariff rates for Bangladesh.
Bangladesh may face tough competition in other markets such as the European ones, as China and Vietnam will also try to grab bigger market shares to offset the probable reduction in shipments to the US due to the high tariffs imposed on them by the Trump administration.
The booking of orders until Christmas was confirmed by Abdullah Hil Rakib, managing director of TEAM Group, which exported $560 million worth of garments last calendar year, about 25 percent of which were destined for the US.
"So, I am not worried about the next Christmas shipment," Rakib told The Daily Star over the phone.
He also said that over the last few years, he has been increasing garment exports to the US but might have to conduct reviews due to the high tariffs that have been proposed.
Rakib is hopeful that garment exports to the US from Bangladesh will increase further because of the high tariffs imposed on products from China and Vietnam.
He said that after Trump's tariffs were announced, a US-focused retailer came to his factory.
The retailer was planning to shift work orders from China to his factory as the tariff on Chinese goods is very high at 145 percent, and the effective rate on Bangladesh was 26 percent, including a previous 16 percent and a 10 percent baseline tariff.
Rakib is hopeful that US buyers will ultimately come to Bangladesh for sourcing garments as the tariff on products from China and Vietnam—two global giants in garment production—is higher than that on products from Bangladesh.
On the other hand, the tariff on Indian goods is lower than that on Bangladeshi products, but India does not have high manufacturing capacity.
Moreover, Pakistan will face lower tariffs than Bangladesh, but its product varieties are not as diversified as those of the latter, he said.
Shovon Islam, managing director of Sparrow Apparels Ltd, which annually exports garments worth $300 million, about 50 percent of which end up in the US, said some of his buyers were demanding that he bear half of the 10 percent baseline tariff.
However, in garment manufacturing, 70 percent is spent on fabrics, which the manufacturers import to make the garments.
He also said he would have to ship all the goods by mid-September to his US buyers so that the goods could be sold during the Christmas season.
He has received 10 percent fewer work orders year-on-year from his US buyers this season because of the Trump tariffs.
Syed M Tanvir, managing director of Pacific Jeans, said he was still holding negotiations with his US buyers over the Christmas shipments.
"My US buyers neither cancelled nor increased the work orders and also did not seek any discount from me," said a Rupganj-based garment exporter asking not to be named.
Some 40 percent of his yearly exports go to the USA.
But at the same time, it is also not clear what the buyers will do after August, as they are also in a wait-and-see approach now because of the 90-day pause in tariffs, he said.
By June this year, the buyers will be able to confirm work orders for the next season, the exporter also said.
Faruque Hassan, former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the buyers may offer lower prices because of the high tariffs, but the exporters would have to stay positive and strong in negotiations.
Currently, more than 900 local garment factories send apparel to the US, and nearly 25 factories have a high concentration on the American markets.
Bangladesh is the third-largest garment exporter to the US after China and Vietnam, and accounts for 9.3 percent of the over $100 billion worth of garments it imports in a year.
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