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Dhaka, July 15, 2025 – Bangladesh faces significant economic and geopolitical challenges due to the United States’ new tariff policy under President Donald Trump, as outlined by Professor Golam Rasul in a recent article. The policy, termed “Reciprocal Tariff,” was announced in April 2025 to revive U.S. domestic industries, reduce trade deficits, and counter “unfair foreign trade practices.” It imposes a universal 10% tariff on all imports, with additional tariffs for countries with significant trade surpluses with the U.S., severely impacting Bangladesh’s export-driven economy.Despite Bangladesh’s relatively modest trade volume with the U.S., it is among the hardest-hit nations due to a 35% additional tariff, bringing the effective tariff rate to approximately 50% when combined with the existing 15% average tariff on Bangladeshi exports in 2024. This steep increase threatens the competitiveness of Bangladesh’s ready-made garment (RMG) sector, which accounts for over 80% of the country’s export revenue and employs around 4 million workers, predominantly women. The U.S. is Bangladesh’s largest single export market, with annual RMG exports valued at approximately $8 billion. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) estimates a potential 15-20% drop in U.S. orders due to the tariff hike, which could ripple across related sectors like raw materials, packaging, transportation, and banking, leading to reduced employment and economic instability. Competitors like Vietnam, which secured a lower 20% tariff through negotiations, and Indonesia, with comparatively favorable terms, are likely to gain a competitive edge, further threatening Bangladesh’s market share. The policy’s discriminatory nature, which appears driven by political and strategic priorities rather than fair trade principles, may violate the World Trade Organization’s (WTO) commitment to equitable trade. Bangladesh’s government has initiated talks with the U.S., offering trade concessions in agriculture, aviation, and energy, including a reported agreement to import 300,000 tons of wheat from the U.S. at a higher cost than alternatives from India, Russia, or Ukraine. Additional concessions, such as purchasing Boeing aircraft and adjusting tariffs on U.S. cotton, gas turbines, semiconductors, and medical equipment, are under consideration. However, these measures could strain Bangladesh’s economy, potentially increasing budget deficits and inflation while raising production costs for the RMG sector. The absence of reciprocal trade benefits, such as reduced U.S. tariffs or preferential trade agreements, risks long-term economic imbalances. Professor Rasul warns that such concessions, without ensuring competitive advantages, could undermine Bangladesh’s economic stability and global market position. Geopolitically, the tariff policy may pressure Bangladesh to align with U.S. strategic interests, including restrictions on trade with sanctioned countries like Russia and Iran, or matching U.S. tariff hikes against third countries. These non-tariff conditions could further complicate Bangladesh’s trade strategy. To navigate these challenges, Bangladesh must strengthen diplomatic efforts through platforms like TICFA, diversify export markets, enhance product variety, and advocate for a fair global trade system to safeguard its national interests and ensure sustainable economic growth.
