Farrukh Khosru :
In response to the United States’ newly announced counter-tariff policy, the Government of Bangladesh has decided to issue two formal letters to the US within 48 hours.
Chief Adviser Muhammad Yunus and Commerce Adviser Sk Bashir Uddin will address letters to US President Donald Trump and the US Trade Representative respectively, according to Chief Adviser’s Press Secretary, Shafiqul Alam.
Amid growing concern over trade relations, the National Board of Revenue (NBR) is currently preparing a list of US products where tariff reductions could be considered.
The aim is to identify items where lower duties might promote increased imports without significantly impacting national revenue. This initiative was discussed in a meeting chaired by Commerce Secretary Md. Mahbubur Rahman, with participation from exporters and economists.
Additionally, the Ministry of Commerce has announced plans to quickly establish a warehouse to support increased cotton imports from the US. Business leaders and economists at the meeting also recommended that Bangladesh formally request a three-month extension from the US before 9 April.
However, Commerce Adviser Sheikh Bashir Uddin stated that there is no possibility of postponing the implementation date of the increased tariffs imposed by Donald Trump, following a meeting with the US Chargé d’Affaires in Dhaka, Tracey Ann Jacobson on Sunday.
Initial findings by the NBR and the Bangladesh Investment Development Authority (BIDA) revealed that 30 US-imported items currently face high tariff rates ranging from 26.2 per cent to 80 per cent. These include generators, valves, beef, agro-products, raw materials, and capital machinery.
In contrast, the average effective tariff rate on US imports is relatively low. While the nominal rate stood at 6.15 per cent last year, once adjusted for taxes like VAT, advance income tax (AIT), and advance tax (AT), the effective rate was just 2.20 per cent.
In fiscal year 2023-24, Bangladesh imported goods worth Tk 702,230 crore globally, of which Tk 28,144 crore came from the US-around 4 per cent of total imports.
The US is a significant exporter of LNG to Bangladesh. Another potential area of growth is the import of electric cars, particularly from Elon Musk’s Tesla, in the near future.
During the first nine months of FY 2024-25, goods worth Tk 22,168 crore were imported from the US, generating Tk 1,010 crore in tax revenue, under 2 per cent of the total import revenue. Similar patterns were observed in the previous fiscal year, with US imports contributing around 1.5 per cent of total revenue from import duties.
Despite importing over 2,200 items from the US this fiscal year, just 10 items accounted for more than Tk 500 crore in tax revenue. Among these, motor vehicles attracted the highest total tax incidence (TTI) at 150.76 per cent, whereas chemical wood pulp faced a TTI of just 20 per cent.
Bangladesh’s import system consists of over 7,500 tariff lines, with tariffs ranging from 0 per cent to as high as 1,021 per cent. Among US imports, the highest rate was 611 per cent on whiskey, though the import volume was negligible.
High tariffs also applied to luxury goods like Mercedes-Benz cars (443 per cent) and vapes (289 per cent), albeit in low quantities.
The highest revenue from US imports came from scrap iron, used in steel production, which generated Tk 4.5 billion in revenue with a fixed tariff rate of 4 per cent per metric tonne.
Currently, the NBR and the Bangladesh Trade and Tariff Commission are evaluating which US goods could be targeted for tariff reductions to address the trade imbalance and improve bilateral trade.
Tariffs in Bangladesh tend to be uniform across countries unless modified by trade agreements such as SAFTA. Experts suggest that any potential tariff reductions will likely focus on high-end luxury goods, which currently bear the highest duties.
Given the cost of transporting goods from the US, Bangladesh generally imports more from closer countries such as India and China. However, US products remain in demand due to their quality and availability.
