Bangladesh faces economic impact as US introduces 35% tariff on exports
This change could affect many factories, particularly those that focus on US customers. Some may struggle to stay open, which could have a direct impact on workers, many of whom are women and the primary breadwinners for their families
The recent decision by the US administration to impose a 35% tariff on Bangladesh's exports has sparked concerns regarding its potential effects on the nation's economy.
The ready-made garment (RMG) sector, a cornerstone of Bangladesh's economic growth, could face significant challenges as a result of this tariff.
The United States is one of Bangladesh's largest export markets, with approximately 20% of the country's garment exports being shipped there. Without the benefit of a free trade agreement, Bangladesh already faces tough competition in the US market. The new tariff may make Bangladeshi products less competitive, possibly reducing export volumes.
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This change could affect many factories, particularly those that focus on US customers. Some may struggle to stay open, which could have a direct impact on workers, many of whom are women and the primary breadwinners for their families.
Additionally, industries that support the garment sector, such as packaging and transportation, as well as local businesses, could also face challenges.
Unlike larger economies like China and Vietnam, Bangladesh has fewer diversified export markets and limited financial reserves. The RMG sector accounts for almost 85% of the country's total export earnings, which makes this situation particularly concerning.
In response, it is important that the government engages with US trade authorities to explore the possibility of preferential treatment or a more gradual approach to implementing the tariff.
This situation also highlights the importance of long-term economic planning and diversification to reduce reliance on a single industry.
Looking ahead, Bangladesh should focus on developing other sectors such as leather and footwear, pharmaceuticals, IT and IT-enabled services, agro-processing, and the blue economy.
Strengthening ties through bilateral and regional trade agreements will also be essential in ensuring more stability and resilience for the future.
While the RMG sector has been a key driver of Bangladesh's economic growth, this tariff underscores the need for careful planning and diversification to safeguard the nation's economic well-being in the years to come.
The author is a former president of the Dhaka Chamber of Commerce and Industry (DCCI)
