US tariff cut brings relief but calls for strategic upgrade in Bangladesh's production

The recent reduction of the US reciprocal tariff on Bangladeshi exports to 20% from 35% is a welcome development. While the outcome offers some relief, it also brings new challenges that call for strategic action and industry-wide focus.

The 20% rate is workable. Congratulations to the negotiation team for successfully negotiating this outcome with a global superpower that often exerts undue pressure on developing economies. Probably one of the toughest battles the Commerce Ministry has had to fight and they've handled it with great maturity and resolve.

This is the time to upgrade. We must double down on innovation, efficiency and value addition. Let's focus on improving product quality, delivery reliability and sustainability to maintain our competitive edge.

Also important to note: this 20% is on top of the existing 15.5–30% duty on apparel products. Buyers will either raise retail prices or reduce volumes. Let's not give in to pressure to share this burden. That would be unsustainable.

We must remain cautious. Vietnam may continue lobbying for lower tariffs and India could negotiate better terms in the near future.

If we stay united and forward-looking, business will grow and Bangladesh will emerge stronger.

On 2 April, US President Donald Trump announced higher tariffs on several countries, citing trade deficit concerns. At that time, Bangladesh was subject to a 37% tariff. 

Later, on 9 April, Washington suspended the tariffs for three months, giving countries an opportunity to negotiate with the US on the matter.

The three-month deadline ended on 9 July. 

The day before, President Trump wrote to Bangladesh's interim government chief adviser, Professor Muhammad Yunus, informing him that the tariff for Bangladesh had been reduced to 35% from 37%. However, the tariffs were not enforced immediately after 9 July.

Countries were given until 31 July to reach trade agreements with the US to lower the tariff rates.

Later, yesterday (31 July), the White House announced a reduction of the tariff to 20%, after the final round of the talks took place between a Bangladesh delegation and US officials in the US capital.