Celebration over US tariff premature: Business leaders warn against complacency
They warned that graduating now would be “suicidal” and urged the government to consider postponing LDC graduation by three to six years.
Highlights:
- Graduation may hike medicine prices, reducing access.
- Competitors may get better tariffs, increasing trade pressure
- Bangladesh is losing competitiveness to countries with FTAs like Vietnam, India
- High shipping costs, government changes, economic shocks are concerns
- LDC graduation in 2026 is risky; a 3–6 year delay is advised
- Graduation could raise tariffs: EU +12%, Canada 16–18%, Japan 7–12%.
- Medicine prices may rise sharply, affecting access
- Careful timing needed to avoid trade losses
- Other countries delayed LDC graduation; Bangladesh could too
Business leaders have urged caution over celebrations surrounding the recent US tariff reduction, calling it premature and warning against complacency.
"I think this is a premature celebration regarding the US tariff, as it is yet to be confirmed what rate our competitor countries will face," said Syed Nasim Manzur, former president of the Metropolitan Chamber of Commerce and Industry (MCCI).
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He made the statement at a seminar titled "LDC Graduation: Some Options for Bangladesh" organised by the International Chamber of Commerce Bangladesh (ICC Bangladesh) at a hotel in Dhaka today (14 August). ICC Bangladesh President Md Mahbubur Rahman presided over the event.
Nasim Manzur, who is also president of the Leathergoods and Footwear Manufacturers and Exporters Association, warned, "Bangladesh is already losing competitiveness. Vietnam has a free trade agreement (FTA) with the European Union, and India has one with the UK."
He highlighted other challenges, adding, "Bangladesh's shipping costs are the highest in the world. We have experienced a change in the system of government — I cannot recall such a massive change happening anywhere else in the world. We are facing an unprecedented economic shock."
After months of negotiations starting in April, the US reduced the initially imposed tariff of 37% for Bangladesh to 20% on July 31. Finance Adviser Salehuddin Ahmed, on 6 August, hinted at the possibility of further negotiations with the United States to reduce retaliatory tariffs, as the agreement has not yet been signed.
"Nothing to be complacent about, as tariff negotiations are still ongoing."
"There is nothing to be complacent about here, as negotiations are still ongoing," said Taskeen Ahmed, president of the Dhaka Chamber of Commerce and Industry (DCCI). "Perhaps India will manage to secure a reduced tariff rate in the future—down to 15% from the current 50%—which would make them more competitive than Bangladesh."
Business leaders at the seminar also expressed concern that Bangladesh is not yet ready to graduate from its Least Developed Country (LDC) status. They warned that graduating now would be "suicidal" and urged the government to consider postponing LDC graduation by three to six years.
"It will be suicidal if Bangladesh graduates from LDC status now."
"It will be suicidal if Bangladesh graduates from LDC status now, as scheduled for November 2026. We do not want a decision that will put pressure on our economy or damage exports," said AK Azad, former president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).
"Our economy has not yet recovered from its fragile situation. Defaulted loans now stand at Tk5.30 lakh crore and will increase further. Around 1,200 factories have applied for loan rescheduling," he added.
Azad warned that moving to developing-country status could lead to factory closures and declining exports. "Tariffs on Bangladeshi goods will increase in key markets, with an additional 12% in the EU, 16–18% in Canada, and 7–12% in Japan."
While the government hopes LDC graduation will attract more foreign investment and easier loans, Azad questioned its timing, saying, "With ongoing problems like the gas crisis, if we cannot survive, how will FDI come?"
Mahmud Hasan Khan Babu, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), warned, "If LDC graduation happens now, the country's ready-made garment industry will struggle to compete with rivals such as Vietnam, Cambodia, and India."
He also stressed the need for an uninterrupted power supply for industries, adding, "At least two to three years are needed to meet the country's electricity demand adequately."
Abdul Muktadir, president of the Bangladesh Association of Pharmaceutical Industries (BAPI), highlighted the pharmaceutical sector's stagnation between 2019 and 2024 due to the Covid-19 pandemic and the Russia-Ukraine war.
"The sector's export market, which was projected to reach USD6 billion by 2025, has stalled at USD3 billion," he said.
Muktadir warned that 30% of leading pharmaceutical companies are near bankruptcy. "If Bangladesh graduates from LDC status, people's ability to afford medicines will take a severe hit. For example, the Hepatitis-C drug, currently available for USD6–7, would rise to USD1,000."
Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), said, "LDC graduation is a matter of pride, but it should not be about ego. We need to carefully consider the potential losses after graduation. Among 12 countries, Bangladesh will lose the most. Its trade loss will make up 90% because it benefits the most from preferential trade."
She also criticised the interim government for hiring foreign experts, questioning, "If we have to bring in experts from abroad, does that mean our local experts are not capable?"
The keynote paper was presented by Sanya Reid Smith, a researcher at the Third World Network. Citing examples of countries such as Botswana and Cambodia that delayed LDC graduation, Smith said Bangladesh could still postpone its decision if it chooses.
According to Nasim Manzur, 2032 would be the ideal time for Bangladesh to graduate from LDC status, stressing that a deep-sea port must be constructed before then.
