US trade policy shouldn’t strain Dhaka ties — diplomacy must prevail

Bangladesh now faces a formidable challenge on the global trade front.

With the potential reimposition of harsh Reciprocal Tariffs (RTs) by the United States under the Trump administration, the economic consequences for the country could be severe, particularly for its readymade garment (RMG) sector, the backbone of its export economy.

According to a recent policy brief by the Centre for Policy Dialogue (CPD), a 37 per cent US tariff could trigger a 56 per cent drop in Bangladeshi exports to its largest trading partner, with a wider 9 per cent fall in global exports.

For a country heavily reliant on external markets and already navigating the complex path toward graduation from Least Developed Country (LDC) status, this is no ordinary threat — it is a test of strategic resilience and diplomatic agility.

The proposed US tariff framework, based on a blunt calculation of bilateral trade deficits, is economically flawed and politically loaded.

It ignores broader trade dynamics and disproportionately penalises low-income economies like Bangladesh, whose import-weighted tariff on US goods is a mere 2.2 per cent, compared to an average of 15.1 per cent levied by the US on Bangladeshi goods.

In 2024 alone, the US collected over $1.2 billion in duties from Bangladesh, nearly 17 times the reverse.

The CPD rightly calls for an urgent recalibration of Bangladesh’s trade strategy.

At the heart of this should be the effective use of the Trade and Investment Cooperation Forum Agreement (TICFA) platform to negotiate concessions and push for a potential Free Trade Agreement (FTA).

Such talks, however, must be guided by robust preparation and informed by the actions of regional competitors like Vietnam and India.

A new focus on diversifying trade through regional FTAs and partnerships under BIMSTEC — and enhancing US investment in Bangladesh can also help offset deficits and secure longer-term benefits.

Proposals such as preferential treatment for garments made from US cotton, local warehousing, and deferred payment systems warrant serious consideration.

Equally important is strengthening intellectual property protections and establishing a dedicated Negotiating Wing to manage evolving trade challenges in an increasingly protectionist global landscape.
Bangladesh must not passively await the next policy shock.

It must act decisively and pragmatically to protect its trade interests and navigate its economic future. In an era of shifting alliances and volatile trade politics, strategic diplomacy is no longer optional — it is essential.