Tariff cut helps yet export future remains fragile
Staff Reporter :
Although the United States has recently lowered tariffs on Bangladeshi exports, Bangladesh’s export outlook remains susceptible to global trade fluctuations, according to a new report by BRAC EPL Stock Brokerage.
The tariff reduction represents a significant achievement, but the brokerage warns that long-term competitiveness will depend on broader policy alignment and strategic diplomatic efforts.
The report follows Washington’s decision to impose a 20 per cent tariff on Bangladeshi goods – a considerable decrease from the originally proposed 37 per cent under the Trump-era reciprocal tariff scheme.
BRAC EPL highlighted that this cut notably improves Bangladesh’s standing in the US market, particularly benefiting the ready-made garment (RMG) sector, which constitutes over 84 per cent of the country’s total exports.
Importantly, the tariff adjustment places Bangladesh on equal footing with key Asian apparel exporters such as Vietnam, Pakistan, Indonesia, and Sri Lanka, thereby creating a more level playing field in one of the world’s largest apparel markets.
However, the report points out that Bangladeshi exporters still face an overall duty burden of around 35 per cent when accounting for various taxes, freight charges, and compliance costs.
Bangladesh’s well-developed RMG infrastructure – among the largest worldwide – provides some resilience, enabling manufacturers to negotiate better pricing and cost pass-throughs with Western buyers.
Nevertheless, competitive pressures persist. India, currently subject to a 25 per cent reciprocal tariff, could gain an advantage if it secures a free trade agreement (FTA) or preferential access with the US, potentially threatening Bangladesh’s market share in the years ahead.
The report also raises concerns about possible trans-shipment challenges, citing Vietnam’s recent difficulties as a warning. Ensuring logistical clarity will be essential as Bangladesh navigates evolving trade routes and compliance regulations.
As part of efforts to balance trade ahead of the forthcoming third round of bilateral negotiations, Bangladesh has committed to increasing imports from the US by $3 billion, including $1.5 billion through government-to-government (G2G) deals.
In fiscal year 2024, Bangladesh imported $2.54 billion worth of goods from the US, up from $2.34 billion the previous year, with a target to double imports to align with the revised tariff framework proposed by the US administration.
Concrete measures have already been implemented: Bangladesh has signed a five-year agreement to import 700,000 tonnes of wheat annually, approved an additional 220,000 tonnes, and plans to increase LNG imports and acquire 25 Boeing aircraft from the US. Further negotiations are ongoing for high-value imports including defence and energy equipment.
While the tariff reduction is a positive development, BRAC EPL concludes that Bangladesh’s export future depends on ongoing diversification, effective bilateral diplomacy, and adaptable trade strategies amid a shifting global landscape.