Turning tariffs into transformation: Bangladesh’s path to trade resilience

The reduction of US tariffs from 35% to 20% on Bangladeshi exports, after  successful rounds of negotiations, can act as a catalyst for transformative change across Bangladesh's trade, industrial, and policy landscape both immediately and in the long run.

The tariff compels Bangladesh to reassess its overdependence on the US market, particularly for ready-made garments (RMG), which account for over 80% of exports. This pressure may accelerate efforts to tap into alternative markets such as Japan, China, South Korea, Australia, the Middle East and Latin America. Diversification would reduce geopolitical risk while unlocking new demand from emerging consumer bases.

Operating under higher cost pressures will likely push the RMG sector to evolve from competing on price to competing on value. Investments in automation, digital supply chains, and design capabilities could enable a shift toward highermargin products like activewear and technical textiles. This transition would not only improve profitability but also enhance Bangladesh's reputation as a high quality supplier.

The new trade reality reinforces the urgency of sustainable production. To remain competitive, exporters may increasingly focus on green certifications, carbon reduction, waste management, and labor rights compliance aligning with the growing ESG expectations of global buyers and regulators.

Bangladesh's strategic trade moves during these rounds of negotiations signal a maturing diplomatic approach. These steps may help rebalance bilateral trade and build goodwill, potentially paving the way for future preferential access or sectoral agreements.

The tariff underscores the need for internal reform as the country approaches LDC graduation in 2026. It may prompt faster action on free trade agreements, trade facilitation, customs modernization, and port infrastructure, all vital for boosting global competitiveness

Entrepreneurs may use this disruption to explore direct-to-consumer e-commerce, brand building, and market repositioning. These innovations could enhance pricing power, brand loyalty, and sectoral resilience in the face of future external shocks.

While the 20% tariff presents short-term economic challenges, it also offers an opportunity for Bangladesh to modernize, diversify, and strengthen its global trade strategy. If navigated wisely, this moment could mark a pivotal step toward a more competitive and mature economy.

The author is a former President of Dhaka Chamber of Commerce and Industry (DCCI).