Dear Editor
Dhaka Opinion Magazine
Dhaka
The tariff move of the United States against Bangladesh — one of the world’s biggest garment exporters — that came with the US President Donald Trump’s announcement of a 37 percent tariff on imports from the latter on different goods including the country’s ready-made garments is shocking. However, the United States has also withdrawn the tariff temporarily for 90 days, giving Bangladesh a short but important reprieve. The tariff being suspended for the full three months is a welcome addition. Once 90 days are up, the future of the imposition of tariffs remains unclear but the key period is probably the first 30 days.
If the reciprocal tariff is reimposed, this can impact the country’s entire economy to a certain significant extent. This will be a hammer blow to not only the garment industry but also textiles, footwear, jute, seafood, frozen food and meat exports, all of which have a heavy dependence on the US market. But among the sectors, the garment sector, which saw an export of $7. 29 billion to the United States in 2023 (out of nearly $47.40 billion) and where there are more than 4 million employees, will be immensely impacted. The effects (if the tariff gets back on) will be devastating in terms of not only reduced foreign currencies but also jobs loss, factory closure, diminished household income, slower economy and increasing poverty. Given the potentially huge impacts, industry leaders have rightly appealed to the interim government to take notice.
A temporary lift does not eradicate the threats of potential impacts, it merely delays them. Bangladesh should act swiftly to permanently withdraw the tariff, which reflects Trump’s “America First Policy” that sought to reduce the United States’ trade gaps and attract domestic manufacturing voters ahead of the last presidential election. But Bangladesh has two very narrow windows in which to act, negotiate and adjust its trade outlook. The temporary respite must consequently be treated as a diplomatic and strategic buffer — not a reversal of policy. There must be a serious negotiation exercise immediately by the Yunus administration with the United States concerning the permanent lifting or reduced tariffs.
Photo credit: https://edition.cnn.com/.
The “Huge Foreign Tariff” battle is a challenging battle for Bangladesh. Since the tariff suspension also provides an opportunity for the government and industry to do something meaningful for the economy, it is vital to stand up for itself and there is no longer an excuse to focus on a single market. Businesses need to diversify buyers and inventories now while export channels remain open. It is not time to get out of traditional alliances and enter into new trading deals, including bilateral deals, with other countries including the European Union, the United Kingdom, Canada, Australia, Japan and the Middle East countries.
Trump’s tariff is not about the trade balance. It is politics too. But it remains unclear whether putting tariffs on a susceptible economy like Bangladesh to tilt the trade imbalance between the countries is fair trade at all. Bangladesh needs to have contingency plans in place to deal with the possible economic challenges if the 37 percent tariff does come back. Producing high-end apparel and textiles, with tech, tech-infused textiles and sustainable production will be helpful if Bangladesh wants its garment industry to remain globally competitive. Bangladesh should also support the domestic industry through stimulus packages, tax breaks and export incentives.
Shakibur Rahman
Department of Economics
Islamic University of Bangladesh
Kustia, Bangladesh
Email:prantome98@gmail.com
DISCLAIMER: The views/opinions expressed are those of the LTE authors and do not necessarily reflect the official policy or position of the Magazine or its editorial team.
