“On the So-Called “Reciprocal Tariffs” Imposed by the US: A Closer Look for Bangladeshi Analysts

Mohammad Bakhtiar Rana:
I wasn’t planning to weigh in on the recent “reciprocal tariffs” the US has introduced on imports, but I think a nuanced perspective may be helpful—especially for fellow Bangladeshi analysts who might be oversimplifying the implications for our apparel exports.

As a student of international business economics, I must emphasize: the impact of these tariffs is far from linear or straightforward. Here are a few key points to consider before jumping to any conclusions:
1. Dubious Calculations: The so-called tariffs “charged to the USA” (see CBC news) are based on questionable or self-determined formulas that are widely criticized. Their legitimacy has been challenged by international experts, as featured in reports by CBC and others.
2. Global Retaliation: These tariffs haven’t gone unanswered. Canada, the EU, and China have responded with counter-tariffs, resulting in a significant hit to the US stock market (see the CNBC and CNN reports). Can the US sustain this trade war—and if so, for how long?
3. Impact on US Consumers: Tariffs raise the cost of imported goods. Since the US lacks competitiveness in several industries, many of these goods are essentials. The result? Higher consumer prices and inflation—borne by everyday Americans.
4. Blowback on US Exports: Major export markets like China and the EU have also imposed retaliatory tariffs. For example, China—one of the biggest buyers of US soybeans—can shift its sourcing to countries like Indonesia or Malaysia within a couple of years. This could mean major losses for American farmers.(see CNBC report)

Now, regarding Bangladesh’s apparel exports:

We export nearly $25-30 billion worth of apparel globally, with approximately one third going to the US. Most of our exports to the US are basics—T-shirts, pants, jackets, sweaters—items that are staple needs, not luxury buys. These aren’t products people stop buying due to minor price changes (see EPB link).

However, the key question is: Can Bangladeshi garments remain competitive if there’s a slight tariff increase compared to our closest competitors?

Here’s a snapshot of the tariff rates on apparel exports to the US from major players (see the detailed tariff chart in the Guardian link) :
• Vietnam: 46%
• Sri Lanka: 44%
• Cambodia: 49%
• Pakistan: 29%
• Bangladesh: 37%
• China: 104% (further added more than 50% tariff with the former 34% as China did not revise its tariff on the US products import despite warning)
• India: 26%
• Thailand: 36%

If the difference in tariffs is marginal (e.g., a $1–$1.50 increase on a $10 product), will US brands really shift their sourcing from Bangladesh to India (for an 11% tariff save) or Pakistan (8%)? If they do, wouldn’t they also stop sourcing from Vietnam, Sri Lanka, and Cambodia—all of which face higher tariffs than Bangladesh?

As Trump administration has further increased tariff on 08 April, 2025 to at least 104% on all Chinese products import to the USA, this has a critical consequence on the other supplying countries like Bangladesh, Pakistan, India in particular for apparel products. If this new tariff on China continues, there would be certainly a massive trade diversion from China to Bangladesh and Pakistan; this means US brands will have no other choice but to increase import from Bangladesh, Pakistan, India on which relatively cheaper tariff is imposed.
However, European Union president has recently talked to the Chinese priemer official to adjust the tariff between The EU and China so that possible trade diversion can take place between China and the EU to balance the Trump’s retaliatory tariff imposed to China. This will benifit both the EU and China while such trade diversion to the EU from China may further increase apparel orders from China to Bangladesh. Let’s hope for a good news!

The reality is: supply chain shifts don’t happen overnight. It can take 4 to 10 years to fully transition a supply network. Even during COVID and the post-COVID period, countries struggled to relocate supply chains effectively.

Let’s not forget: in 2005, when Bangladesh lost its quota-free export privileges under the MFA to the US market, many predicted doom. Instead, we increased our market share in both the US and EU—and have since entered the Chinese and Russian market too.

While the GSP may phase out in the EU, Bangladesh has built a reputation not just on cost-competitiveness but also on quality, reliability, and a well-organized ecosystem. That matters.

A short-term dip may happen. Uncertainty is part of international trade. But this is far from the end of the game.
As you see Trump has paused this receprocal tariff announced for 90 days for all countries except China; which he may further consider as to whether those tariff will be imposed in the same fashion.

I trust that the new government will review Bangladesh’s own import tariffs on US goods and make adjustments where needed, helping to facilitate a fairer approach from the US in return.

When American consumers will have to pay the higher prices for the same garments, due to increasing tariffs, they are likely to reconsider the receprocal tariff imposed on countries like Bangladesh that exports products at a cheaper price (with a comparative advantage); as Nobel Laurate in Economics Paul Krugman has asserted.

Bangladesh’s garment industry has become iconic on the global stage. A small tariff change won’t destroy it. But going forward, we must prioritize green transition and labor wellbeing—not just for our global reputation, but for the health of the sector, sustainability competitiveness and the planet.

(The writer is a PhD (Aalborg, DK) MBA (Rajshahi,BD), MSc (Stirling, UK) Professor of International Business and Strategy Aalborg University, Denmark.)