Bangladesh can expand exports to US amid Trump’s tariff hike: WTO

The World Trade Organization (WTO) has observed that Trump's tariff hike could open the door for Bangladesh to expand its exports to the United States (US).

"Least-Developed Countries (LDCs) are projected to see their exports ... The reason is that some LDCs – for example, Cambodia, Bangladesh and Lesotho – can expand their exports to the United States because their exports are highly dependent on products for which China currently has a large import share in total US imports, such as clothing and textiles, as well as electronic equipment," the WTO Secretariat's latest Global Trade Outlook and Statistics report, released yesterday (16 April), made this observation.

According to the outlook, the volume of world merchandise trade is likely to drop by 0.2% in the current year provided that the US President Donald Trump's suspension of reciprocal tariffs continued.

The trade volume could, however, shrink further, by 1.50%, if the situation deteriorates.

"The outlook for global trade has deteriorated sharply due to a surge in tariffs and trade policy uncertainty (TPU)," said the report.

It added that based on measures in place as of 14 April, including the suspension of 'reciprocal tariffs' by the United States, the volume of world merchandise trade is now expected to decline by 0.2% in 2025 before posting a modest recovery of 2.5% in 2026.

"The new estimate for 2025 is nearly three percentage points lower than it would have been without recent policy shifts, and marks a significant reversal from the start of the year when WTO economists expected to see continued trade expansion supported by improving macroeconomic conditions in 2025 under current conditions," it further added.

Risks to the forecast include the implementation of the currently suspended reciprocal tariffs by the US and a broader spill-over of trade policy uncertainty beyond US-linked trade relationships, according to the report.

"If enacted, reciprocal tariffs would reduce world merchandise trade growth by an additional 0.6 percentage points, posing particular risks for LDCs, while a spreading of TPU would shave off a further 0.8 percentage points." it continued.

Along together, the reciprocal tariffs and spreading TPU would lead to a 1.50% decline in world merchandise trade volume in the current year.

WTO also pointed out that the unprecedented nature of the recent shift in trade policy poses a challenge for economic forecasters since there has been no directly comparable event in recent history, and because available data mostly pre-date the introduction of the measures.

Though trade in services is not directly subject to tariffs, it may be also affected adversely, cautioned the WTO report.

"Tariff induced declines in goods trade weaken demand for related services such as transport and logistics, while broader uncertainty dampens discretionary spending on travel and slows investment-related services," it explained.

So, the global volume of trade in commercial services may grow by 4.0% in the current year and 4.1% in 2026 – well below baseline projections of 5.1% and 4.8%, mentioned the report.

It is to be noted that for the first time, the WTO's Global Trade Outlook and Statistics report included projections for trade in services trade. So far, it was focused on merchandise trade estimates.

The WTO report also said that the disruption in US-China trade is likely to 'trigger significant trade diversion, raising concerns among third markets about increased competition from China.'

Chinese merchandise exports are projected to rise by 4% to 9% across all regions outside North America as trade is redirected.

"At the same time, US imports from China are expected to fall sharply in sectors such as textiles, apparel and electrical equipment, creating new export opportunities for other suppliers able to fill the gap," it added.

WTO report also mentioned that the recent downturn in trade prospects follows a strong performance in 2024, when the volume of world merchandise trade increased by 2.9% and trade in commercial services expanded by 6.8%.

With global GDP rising by 2.8% at market exchange rates, it was the first year since 2017 (excluding the post-pandemic rebound) when merchandise trade growth outpaced output, according to the WTO report.  WTO economists expect world GDP at market exchange rates to grow by 2.20% in 2025.

In value terms, world merchandise exports increased by 2% to $24.43 trillion, indicating a decline in average export and import prices.

Again, exports of commercial services exports raised by 9% to $ 8.69 trillion, reflecting strong demand across a range of sectors.