Tariffs may cut exports to US market; Bangladesh should go for negotiation right away: Zahid

There is no doubt that the new tariff policy of the United States will have a negative impact on Bangladesh's exports but this impact will be due to a decline in demand in the US economy.

It is anticipated that the imposition of these tariffs will lead to an economic downturn in the US. Prices of all goods will increase, which may reduce consumers' purchasing power.

As a result, there is a risk of a decline in exports from Bangladesh.

Bangladesh should now engage in negotiations. It is essential to discuss with the US whether the data and calculations behind the 74% tariff on US exports to Bangladesh are accurate.

At the same time, the government should inform the US about any reform initiatives it has undertaken regarding the indirect tariff factors that the US has considered in its decision.

Additionally, efforts should be made to explore ways to benefit from any exemptions that the US is offering in the imposition of these tariffs.

The US justified imposing a 37% tariff on Bangladesh by arguing that US exports to Bangladesh face a total tariff of 74%, including both direct and indirect duties. The Trump administration applied a 50% discount on this rate and imposed a tariff of 37%.

However, the imposition of additional tariffs does not change Bangladesh's competitive position in the US market, as similar tariffs have been imposed on other countries as well. In some cases, the tariffs on certain countries are even higher than those on Bangladesh.

Bangladesh's competitor countries, such as Vietnam, Cambodia, India, Pakistan, and Sri Lanka, will not necessarily gain any additional advantage from this situation.

Therefore, if Bangladesh can address the issues that led to the increased tariffs and negotiate to bring them down, there will be an opportunity to mitigate the negative impact.

The Trump administration has granted exemptions in certain sectors, including pharmaceuticals – even extending exemptions to China in this case. Additionally, low-price and essential items have been given tariff exemptions. However, Bangladesh has not yet been included in these exemptions.

Bangladesh could argue that it exports low-price and essential items, particularly affordable readymade garments. If there is an opportunity to classify other exported goods as essential items in the US market, Bangladesh should actively pursue that approach.

The Foreign Trade Barriers 2025 report released by the US Trade Representative highlights that Bangladesh has a high number of non-tariff barriers, and the rationale behind these barriers is not transparent. The report also mentions that there is no level playing field in public procurement, and corruption is present.

The report, citing American companies, claims that there is a lack of transparency in Bangladesh's government procurement system. It also points out government interference in data privacy.

Additionally, Bangladesh provides export subsidies, and while the country appears to have an open investment environment on paper, the reality is different. In practice, investing in Bangladesh can be difficult due to various bureaucratic complexities and government-imposed hurdles.

The report provides a kind of guideline on why additional tariffs have been imposed on Bangladesh and what steps the country can take to get relief from these tariffs. The government should engage with the relevant authorities, initiate negotiations, and address these concerns.

Bangladesh has already reduced export subsidies in several areas. The report also acknowledges the current government's intent to implement reforms. The government should communicate what reforms have already been made and outline the upcoming reforms planned for the future.

Also, exporters must also take collective action. There needs to be a unified stance that buyers, not suppliers, should bear the additional tariff. This is similar to the approach taken by European Union businesses.

Bangladeshi businesses must move away from cutthroat competition among themselves. No individual seller should absorb the additional tariff to secure sales. Instead, the extra cost should be passed on to buyers. Competing countries like Vietnam and Cambodia are likely to adopt the same strategy.

To implement this, the BGMEA and the BKMEA should develop a common strategy that all members must adhere to, he said. There should also be enforcement measures, including penalties, for businesses that do not comply with this collective strategy.