New US trade war: Opportunity or threat for Bangladesh?

The world holds its breath. At 21:00 British Summer Time on Wednesday – 2am Thursday in Bangladesh – US President Donald Trump is set to unveil a sweeping tariff plan. The White House calls it "Liberation Day". But for the rest of the world, it feels more like Judgment Day.

From the European Union to Canada, Mexico to China, Japan to India – everyone is on edge. These nations have already vowed to strike back if Trump follows through. The trade war, if ignited, will be brutal.

What will these new tariffs mean? And, more crucially, how will they impact Bangladesh, whose top export market is the United States, followed closely by the European Union?

Speculation is rife about a 20% across-the-board tariff. If that happens, it won't just be another economic move – it will be a seismic shift in global trade, one that could unravel decades of economic order built since World War II. China, Japan, and South Korea – three rivals – are now standing together in a rare show of unity. Even Canada, America's closest ally, is fuming.

The stakes are high – Aston University Business School estimates that global trade disruptions and rising costs could erase $1.4 trillion from the world economy.

And markets are already in panic mode. Gold has skyrocketed to $3,100 per ounce – its best quarter in nearly 40 years as central banks are willing to boost gold reserves. Because right now, trust in the system is crumbling.

The bottom line is if Trump goes all in, a full-scale retaliation is expected. Economies will wobble. Uncertainty will spike. Goldman Sachs pegs the odds of a US recession at 35%. JPMorgan 40%.

For Bangladesh, a country that thrives on exports, this could be a game-changer – and may not in a good way.

Trump targets "Dirty 15" countries, but Bangladesh not on list

It started with a single phrase – "Dirty 15" – dropped by US Treasury Secretary Scott Bessent during a Fox Business interview on 18 March. Since then, the world has been asking: Who's on the list?

These are the countries the US believes are the worst offenders – those that slap hefty tariffs and trade barriers on American goods while contributing to Washington's trillion-dollar trade deficit. And they're about to face the music.

While no official list has been released, US Commerce Department data from 2024 points to the usual suspects. The biggest trade deficit? China. Then come the European Union, Mexico, Vietnam, Ireland, Germany, Taiwan, Japan, South Korea, Canada, India, Thailand, Italy, Switzerland, Malaysia, Indonesia, France, Austria, and Sweden.

A window of opportunity?

Nowhere near the "Dirty 15," says Mohammad Abdur Razzaque, an economist specialising in international trade. And that, at least in the short term, could be an advantage.

With the US tightening the screws on China and Vietnam — both heavily involved in textile and apparel manufacturing — there's room for Bangladesh to step up.

"But to truly capitalise," Razzaque warns, "Bangladesh must invest heavily in garments and man-made fibre." 

That means more than just local investment. Foreign direct investment is key. The global trade battlefield is shifting, and Bangladesh must move with it, he noted.

Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), also sees an opportunity in the tariff war. But Bangladesh won't automatically benefit, as its apparel exports are mostly low to mid-range, differing from China's product mix.

"To capture a share of China's exports, Bangladesh must boost efficiency, improve quality, and enhance productivity. Exporters will need to invest in skill development and high-end product manufacturing to stay competitive," she said.

The long-term risk:

Yet, Razzaque also issues a warning. Trade wars come with collateral damage.

"When recession hit the US or Europe in the past, Bangladesh's garment exports—accounting for 85% of total exports — took a serious hit," he says. Inflation in the West? That, too, drags down demand for Bangladeshi products.

So, while avoiding the "Dirty 15" list might be a short-term win, the long game is far more unpredictable under Trump's administration.