BD millers to redouble US cotton import

To reciprocate the steep US reciprocal tariff being cut down to 20 per cent, Bangladeshi textile and spinning millers target to augment American cotton imports under tradeoffs to make the country’s apparel trade competitive in the United States.

The US Presidential Actions issued on April 02 this year set a condition that export goods to the USA should use at least 20 per cent of the customs value of the subject article of US-origin content, which is likely to get a certain amount of duty exemptions under the US customs and border protection (CBP) provisions.

A customs expert explains that “US content” means the portion of a product’s value that comes from parts or materials that are made, sourced, or significantly changed in the United States, according to US customs rules.

Simply put, it’s the part of the product that is truly America-originated.

“To receive a duty exemption, at least 20 percent of the product’s total value must come from US sources. Only that US portion is eligible for the exemption – the rest of the product, made from non-US materials, is still subject to import duties,” he says.

Speaking to The Financial Express, the country’s textile makers said the new conditions would push them to increase US cotton imports, and by the end of this year, the volume could be double the current usage.

Exporters have cited a practical example of a Calvin Klein denim pants with an FOB (Free On Board) value around $8, where the fabric component is approximately $4.125. Of that, the cotton content accounts for about 33.25 per cent.

However, they also note that if the denim pants are produced for a lower-value brand such as Kontoor, the cotton component may be slightly lower – but would still meet the 20-percent threshold.

Envoy Textile founder-chairman Kutubuddin Ahmed told the FE that the company has capacity to produce around 54 million yards of denim fabrics annually, 60 per cent of which go to the US market.

The company imports 24,000 tonnes of cotton annually and currently only 15 per cent of the cotton is sourced from the United States. Now the company plans to ramp up its imports of US cotton, with the potential to raise the share by nearly 60 per cent.

Kutubuddin Ahmed said, “We are already in talks with a US supplier to import 250 tonnes of cotton, considering the tariff issue.”

The conditions requiring local value addition and the use of US raw materials will help attract investment in Bangladesh’s spinning and textile mills, which will create more employment opportunities in the country, hopes Kutubuddin Ahmed, a former president of BGMEA.

Similarly, Mohammad Abdullah Zaber, current managing director of Zaber and Zubair Fabrics Limited, says, “US cotton is expensive than other cotton…we are using that as per buyers’ requirements for the American market.”

He adds: “Now every brand and retailer will ask to produce their goods with US cotton to get duty benefits as per the US government requirements.”

The company currently uses nearly 30-percent US cotton while the factory’s annual consumption is nearly 2,500 tonnes.

Zaber hopes by this yearend the US cotton consumption will be about half of total cotton uses as the company’s 50-percent exports go for the US market, while its annual export is about $170 million.

According the company officials its major US buyers are Target America, Ralph Lauren, Calvin Klein, American Eagle, and Tom Hilfiger and Gap.

BTMA President Showkat Aziz Russel says the sector needs government support to increase US cotton imports. Textile-industry leaders are urging the government to lower the EDF loan interest rate to 2.0 per cent for US cotton imports.

He has also requested 3-4 cent-per-pound cash incentives, noting that US cotton is 3.0-4.0-percent more expensive than cotton from other sources.

Additionally, textile millers are seeking a waiver of the 1.0-percent Advance Income Tax (AIT) on export earnings.

Despite a recent decline in US cotton’s market share in Bangladesh, local millers are preparing to double imports from the USA within a year-responding to rising global demand and shifting trade dynamics.

According to the US Department of Agriculture (USDA), Bangladesh is projected to retain its position as world’s largest cotton importer in marketing year (MY) 2025-26, with imports expected to reach 8.5 million bales.

The USDA report also projects a modest rebound in global cotton consumption, which is set to hit a five-year high of 118.1 million bales, driven by steady economic activity in major textile-exporting countries, like Bangladesh and Vietnam.

Global cotton trade is forecast to increase by 2.3 million bales to 44.8 million bales in MY26-signalling a broader recovery in demand across textile-producing economies.

In contrast, China’s imports are expected to shrink significantly, falling from 15 million bales in MY24 to just 7 million bales by MY26. This sharp decline is paving the way for countries like Bangladesh to climb in global rankings, marking a notable structural shift in cotton-trade flows.

To support this momentum, the Bangladesh government is finalizing a dedicated bonded warehouse to ensure duty-free access for US cotton. Chief Adviser Muhammad Yunus recently wrote to the US President pledging a substantial rise in US farm imports-particularly cotton-as part of broader trade diplomacy to reduce bilateral imbalances.

Bangladesh is also formulating a roadmap to double US cotton imports by 2028, aiming to source 25 per cent of its total cotton from American growers. Based on 2024 projections, US cotton imports are expected to rise from 1.0 million bales in 2025 to 2.1 million bales by 2028. The share of US cotton in total imports will grow from 12 per cent to 25 per cent and Import value is projected to nearly double, from $473.8 million to $987.04 million.

This pivot comes as Bangladesh’s ready-made garment (RMG) exports surged 13.79per cent year on year, reaching $7.55 billion in FY2024-25, according to EPB data.

The USDA notes that “since mid-January 2025, international brands have resumed placing orders following months of political uncertainty,” which has fuelled a sharp rise in demand for raw materials, including cotton.

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