The United States, under President Donald Trump, has imposed new tariffs on imports from various countries, increasing tariffs on Bangladeshi products to 37%—a sharp rise from the previous 15% average.
Economist Dr Mahfuz Kabir warns that this move could significantly harm Bangladesh’s exports, investment climate, and overall economy.
Speaking to Jago News, Dr Kabir said, "This decision by the Trump administration will negatively impact exports, particularly the ready-made garment (RMG) sector. Bangladesh’s competitors, especially India, have been subjected to much lower tariffs. As a result, upcoming garment orders may shift to India, at least temporarily. If the administration does not reverse this decision, Bangladesh could see a long-term decline in US-bound exports."
Impact on investment
Dr Kabir expressed concern that foreign investments, particularly from China, might be affected.
He noted that China now faces a lower tariff rate than Bangladesh in the US market, which may deter Chinese investors from setting up factories in Bangladesh.
"For years, 'Made in Bangladesh' has enjoyed duty-free benefits in the US market. However, with this tariff hike, those advantages will be diminished. This could lead to reduced investments, especially from firms that have set up production in Bangladesh targeting the US market," he explained.
Possible countermeasures
Despite the challenges, Dr Kabir believes Bangladesh still has diplomatic and policy options. He suggested that the government initiate negotiations under the Trade and Investment Cooperation Forum Agreement (TICFA) with the US.
However, since the tariff hike was a White House decision rather than a US Department of Commerce ruling, diplomatic efforts must engage both the US administration and relevant trade authorities.
He also emphasised the need for Bangladesh’s Ministry of Commerce, Ministry of Foreign Affairs, and National Board of Revenue (NBR) to work together to explore tariff adjustments and policy strategies.
"Many garment traders and foreign investors might now feel uncertain. They may start looking at alternative destinations like Honduras, Egypt, and Turkey, where tariff rates are lower.
This situation requires urgent action, as losing investment and exports could have long-term consequences," Dr Kabir added.
US: A key market for Bangladesh
The United States is one of Bangladesh’s two largest export destinations, with $8.4 billion in annual exports—primarily from the ready-made garment sector. In 2023, garment exports alone accounted for $7.34 billion. With the new tariff increase, concerns are growing over the impact on factories, job losses, and reduced trade volume.
Govt response
Immediate after Trump’s imposition of reciprocal tariffs, Bangladesh is reviewing its tariffs on imports from the US, according to Abul Kalam Azad Majumder, Deputy Press Secretary to the Chief Adviser.
“Bangladesh is reviewing its tariffs on products imported from the United States. The National Board of Revenue is identifying options to rationalize tariffs expeditiously, which is necessary to address the matter,” Azad Majumder wrote on his Facebook account at 8:38 am on Thursday.
“The United States is a close friend of Bangladesh and our largest export destination. We have been working with the US since the Trump Administration took over to enhance trade and investment cooperation between our two countries. Our ongoing work with the US government is expected to help address the tariff issue,” he added.