Mutation of risk into opportunity

A substantial downside risk has been transformed into a compelling upside opportunity with the recent reduction of the US reciprocal tariff on imports from Bangladesh, lowered from 35% to 20%. As this reduction applies to an existing 15% rate, the total tariff now stands at 35%. 

This development comes on the heels of a challenging period in early July, when Bangladesh faced a significant comparative disadvantage after the US imposed a 35% tariff – while key competitors such as India and Pakistan were subject to tariffs of 26% and 29% respectively. Today, Bangladesh finds itself with a notable tariff advantage over India and nearly on equal footing with nations like Pakistan, Vietnam, Indonesia, and the Philippines.

Skillful negotiation by Bangladesh team

This achievement is a testament to the dedication and skill of the Bangladesh negotiation team. Equal credit must be extended to members of the business community, researchers, and civil servants whose direct and indirect efforts were instrumental in crafting a persuasive position paper – one that convinced the US administration of Bangladesh's commitment to forging a mutually beneficial agreement.

While this success warrants celebration – it promises to safeguard the livelihoods of countless workers and enterprises across Bangladesh – it should not breed complacency. Opportunities, after all, only bear fruit when actively pursued. This is not merely a matter of avoiding a misstep at the final moment, but of ensuring every stage of the process is thoughtfully managed, so that the ultimate result is both satisfying and sustainable.

Workforce should also benefit

Our path forward requires concerted action on several fronts. Foremost among these is the imperative to secure fair wages for our workforce. Factory owners should proactively implement wage increases, offering much-needed relief to workers facing economic hardship. Though it remains essential for businesses to maintain reasonable profit margins, it is equally important to recognise the potential long-term dividends of improved labour conditions – particularly as Bangladesh works to shed the "sweatshop labour" image. This shift will be critical in preserving access to markets beyond the US; UK, and EU, especially as the nation approaches its graduation from the LDC list in 2026.

Reform of logistics vital

Additionally, reforming trade logistics is vital to reducing lead times and the overall cost of international commerce. Many immediate improvements – "low-hanging fruits" – are within reach if pursued with prudent management. Priorities must include enhancing the efficiency of Chottogram port, operationalising NBR's National Single Window, and ensuring that the domestic transportation network, from production sites to ports, functions seamlessly.

By focusing on these areas, Bangladesh can fully capitalise on the opportunities before it, ensuring that this recent triumph becomes a catalyst for broader, sustainable growth.  Complacence is public enemy number one. 

By channelling efforts into these strategic priorities, Bangladesh stands poised to transform current opportunities into engines of lasting, inclusive prosperity. Let us remember: the greatest threat to progress is not adversity, but complacency itself.

Zahid Hussain is a former lead economist of The World Bank, Dhaka Office