If Bangladesh offers zero-duty to US, it must be extended to other countries too: CPD

If Bangladesh offers zero tariffs on the top three imported products from the US, it would be required to extend the same benefit to other countries as well, said Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD).

As a result, Bangladesh would face a total tariff revenue loss of $170 million, he said at an event titled "Trump Reciprocal Tariffs and Bangladesh: Implications and Response", organised by the CPD today (17 April) in Dhaka.

The selection of items for offering zero-duty (reduced import-weighted duty) has to be done carefully as Bangladesh's customs and other duties on US imports are already very low, he added.

"In 2024, Bangladesh earned $180 million from import duties on goods from the US, while the US collected $1.27 billion from Bangladeshi exports," Mustafiz said during his keynote presentation. 

He noted that Bangladesh's import-weighted average tariff on US goods stands at 6.2%, but with rebate provisions on VAT and advance income tax, the effective rate falls to just 2.2%.

If the duties on the top three duty-paid imported items are brought down to 0, duty on imports on these from the US will be $61.6 million, he said. But extending this under World Trade Organization's Most-Favoured Nation obligations would mean a total loss of $168.1 million on those products alone.

Mustafiz added that while Bangladesh faces relatively low tariffs on its exports to the US, the average import-weighted tariff still stands at 15.1%, with duties on apparel alone reaching $1.19 billion at a rate of 16.8%.

He further said Bangladesh should not assume automatic benefits just because of higher US tariffs on China. "China mainly exports man-made fibre garments, whereas 70% of our exports are cotton-based. So we're not necessarily the natural alternative."

He added that a realistic path forward requires regional cooperation, policy reform, and proactive engagement. He also suggested that Trump's trade policy could create opportunities for Bangladesh as it graduates from Least Developed Country status.

"To secure duty-free access to the US, Bangladesh would need to increase imports from the US by 200% and exports by 50% – which is not feasible in the short term," he noted. "The best approach now is to observe developments, remain engaged in dialogue, and take measured steps."

The session was moderated by CPD Executive Director Fahmida Khatun and attended by CPD Chairman Rehman Sobhan.

China is Trump's primary target

China is the main target of Trump's tariff policy, and the future of their trade relationship remains uncertain, said Rehman Sobhan at the event. 

In this context, Bangladesh should focus on diversifying export markets over the next five years, he said. Expanding market share within the European Union is key, especially as Bangladesh will retain duty-free access there for several more years.

"Bangladesh must also tap into opportunities in Canada, Australia, and Japan," Sobhan added. He stressed that Asia, poised to become the epicentre of global economic growth within the next 25 years.

"The uncertainty triggered by Trump's tariff policy must be addressed. The US remains Bangladesh's single largest export destination – if this volatility continues, alternative markets must be explored," he said.

'90-day period provides opportunity'

Former BKMEA president and Plummy Fashions MD Md Fazlul Haque said buyers have not adjusted prices despite the 10% duty, leaving exporters in limbo.

"The Trump administration may withdraw the measure within 90 days, but nothing is certain," he said.

Only 20-25 large RMG factories may absorb the shock, while smaller units could face up to $100 million in tariffs over three months – requiring urgent policy support, he warned. Order talks with US buyers have already slowed, though their prior stockpiling may soften the blow.

Still, he noted that Bangladesh could seize redirected orders and investments if it acts swiftly amid shifting supply chains from China.

HSBC Bangladesh CEO Md Mahbub ur Rahman said Vietnam benefits from a UK FTA, while Bangladesh relies on LDC privileges. "If those are lost, the 90-day window is critical to shoring up competitiveness."

JMI Group MD Abdur Razzaque said importing LPG from the US could help bridge the trade gap. "The main barrier is transport – large vessels are needed. Government intervention is vital."

Shams Mahmud, president of the Bangladesh Thai Chamber and former DCCI chief, cautioned that drastic tariff cuts could hurt domestic industry. "There's real fear of heightened NBR scrutiny as it chases revenue targets.