The recent decision by the Trump administration to impose new reciprocal tariffs has sparked significant concerns among experts and stakeholders in Bangladesh.
According to Zahid Hussain, former lead economist at the World Bank’s Dhaka Office, this move is expected to result in an economic downturn in the United States by increasing prices and reducing consumers’ purchasing power. He cautioned that this could lead to a decline in Bangladeshi exports.
Zahid emphasised the urgency for Bangladesh to engage in negotiations with the US to verify the data and calculations that led to the 74 per cent tariff on Bangladeshi exports. He also suggested that the government highlight any reform initiatives that have been undertaken regarding indirect tariff factors that the US considered in its decision-making process. Furthermore, Bangladesh should explore potential exemptions that the US has offered in certain sectors.
The Trump administration justified imposing a 37 per cent tariff on Bangladesh, arguing that US exports to Bangladesh face a total tariff of 74 per cent, including both direct and indirect duties. Zahid explained that the administration applied a 50 per cent discount on this rate, bringing the final tariff down to 37 per cent.
Despite these new tariffs, Zahid noted that Bangladesh’s competitive position in the US market remains unchanged, as similar tariffs have been imposed on other countries, some even higher than those imposed on Bangladesh. He pointed out that competitor countries such as Vietnam, Cambodia, India, Pakistan, and Sri Lanka may not necessarily gain a competitive advantage from the new policy.
The Foreign Trade Barriers 2025 report by the US Trade Representative (USTR) identifies several trade barriers in Bangladesh, including non-transparent tariff policies, lack of a level playing field in public procurement, and corruption. The report also highlights difficulties in Bangladesh’s investment environment, which is burdened by bureaucratic complexities and government-imposed hurdles.
Zahid recommended that the government take proactive steps to address these concerns and communicate the progress of ongoing reforms. He emphasized the importance of demonstrating the reduction of export subsidies and other positive changes to the US authorities to negotiate tariff reductions.
To mitigate the impact of the tariffs, Zahid urged Bangladeshi exporters to adopt a unified stance that ensures buyers, rather than suppliers, absorb the additional costs. He advised that organizations like the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) establish a collective strategy to prevent individual suppliers from undercutting each other.
Selim Raihan, a noted economist and executive director of the South Asian Network on Economic Modelling (SANEM), described the new tariffs as a major shift in global trade dynamics. He noted that these tariffs challenge the Most Favoured Nation (MFN) principle of the GATT/WTO framework. The uncertainty surrounding tariff rates on specific products complicates the global trade landscape, making it difficult to predict winners and losers in the US market.
Former BGMEA Vice President Rakibul Alam Chowdhury expressed grave concerns over the potential impact of these tariffs on Bangladesh’s RMG sector. He warned that rising manufacturing costs, wage hikes, and inflation could make it harder for Bangladeshi businesses to remain competitive. He also noted that US buyers might shift sourcing to alternative markets if costs become prohibitive.
Rakibul urged the government to reassess its tariff policy and engage in diplomatic efforts to negotiate with the US government. He warned that if these efforts fail, the RMG sector could face severe consequences.
The new tariffs imposed by the Trump administration present significant challenges for Bangladesh’s economy and trade relations. Experts have underscored the importance of diplomatic engagement, policy reforms, and strategic coordination among exporters to mitigate the impact. The government must act swiftly to negotiate fair trade terms and protect Bangladesh’s export sector from potential downturns in the US market.
