Originally posted in The Business Standard on 16 April 2025
If the duties on the top three duty-paid imported items are brought down to 0, duty on imports on these from the USA will be $61.6 million
If Bangladesh offers zero tariffs on the top three imported products from the US, it would be required to extend the same benefit to other countries as well, said Professor Mustafizur Rahman, distinguished fellow, CPD. As a result, Bangladesh would face a total tariff revenue loss of $170 million, he added.
The selection of items for offering zero-duty (reduced import-weighted duty) has to be done carefully as Bangladesh’s customs and other duties on US imports are already very low, he added while speaking at an event titled “Trump Reciprocal Tariffs and Bangladesh: Implications and Response”, organised by the Center for Policy Dialogue.
In his keynote paper, Mostafizur Rahman said that in 2024, Bangladesh earned $180 million in import duties on goods imported from the United States. In contrast, the United States collected $1.27 billion in duties on goods exported from Bangladesh.
He highlighted that Bangladesh’s tariffs on US imports reached around 6.2%.
If rebates are considered, as import duties such as VAT and AIT are eligible for rebates, the imported weighted duties – a lower average tariff rate on imported goods, taking into account the different import quantities and tariff rates for each product – comes to 2.2%.
In monetary terms, the duties amounted to $180.5 million in 2024.
If the duties on the top three duty-paid imported items are brought down to 0, duty on imports on these from the USA will be $61.6 million, he said during his keynote presentation.
If this is offered on an Most-Favoured Nation basis, total duty loss on these three items will be $168.1 million.
Import-weighted average tariff on all US imports from Bangladesh is 15.1%, he said, with duties on Bangladeshi apparels alone touching $1.19b, having import-weighted duties of 16.8%.
Speaking at the event, former member of the Bangladesh Tariff and Trade Commission Mostafa Abid Khan, said, “First, we need to understand that this is not a reciprocal tariff. Therefore, no matter how much we respond, it won’t be effective. What we really need to understand is what the United States wants. For that, discussions must continue.”
He added, “Even if the US reduces tariffs on a particular product, it is not guaranteed that exports from the US to Bangladesh will increase. The current option is to consider a Free Trade Agreement [FTA] with the US. However, reaching an FTA with the US is not easy. Every time we have tried, the US has said we are not yet ready.”
Mustafizur Rahman said that the impact of tariffs will vary from country to country.
He said, “It is not accurate to assume that Bangladesh will greatly benefit simply because higher tariffs have been imposed on China. This is because China exports mainly man-made fibre garments to the United States, whereas 70% of Bangladesh’s exports are cotton-based. As a result, Bangladesh is unlikely to gain significantly.”
What kind of benefits Bangladesh can secure from the US will depend on continued discussions. US investment in Bangladesh is currently low, and increasing it would depend on broader policy reforms.
He further said that to overcome these challenges, regional cooperation must be strengthened.
He also noted that Trump’s tariff policy could help accelerate Bangladesh’s graduation from LDC status. Actions will depend on what happens after the 90-day period. For Bangladesh to achieve duty-free access, imports from the US would have to increase by 200%, and exports by 50%—which is not practically achievable.
Mustafizur Rahman concluded, “We now need to wait, observe, and take appropriate steps accordingly.”
The session was moderated by CPD Executive Director Fahmida Khatun, and was attended by CPD Chairman Rehman Sobhan.
Tariff will not affect US buyers now: Md Fazlul Haque
Md Fazlul Haque, former president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and managing director of Plummy Fashions Ltd, said, “The actions of the Trump administration are like an unknown disease—no economist has been able to identify its nature. As a result, we are uncertain about what may happen to us. We are not sure which measure (or ‘medicine’) will work to resolve this issue. It is possible that the Trump administration might withdraw the measure within the 90-day period as a solution. However, it remains uncertain.”
He added, “None of the buyers are yet willing to change their price tags despite the imposition of a 10% duty. It seems to be a 50:50 situation.”
He stated that 20–25 Bangladeshi RMG exporting factories may have the capacity to absorb the shock of this 10% additional tariff.
However, small and medium-sized factories will require policy support from the government, as they may have to bear nearly $100 million in tariffs during the 90-day period. Banks may be reluctant to accommodate this burden.
The former BKMEA president also noted that, as a result, order negotiations for the US market will likely slow down until the 90-day issue is resolved.
He added that this will not affect US buyers much, as they have already imported additional goods in anticipation of tariff uncertainty, which may benefit them in the coming days. In light of the Trump tariff tensions, some orders and investments are expected to shift from China. He said if Bangladesh can manage to attract those orders and investments, it would help boost exports.
90-day period provides opportunity to strengthen market position: Md Mahbub ur Rahman
Md Mahbub ur Rahman, chief executive officer, HSBC Bangladesh, said, “Vietnam is getting duty-free market access due to its FTA with the UK, while Bangladesh is enjoying duty-free access as an LDC.
“If we lose this facility, the 90-day period provides an opportunity to strengthen our market position.”
Transportation from US main barrier: Abdur Razzaque
JMI Group Managing Director Abdur Razzaque said, “We are importing nearly $1 billion worth of LPG from nearshore sources. If we are able to import from the USA, it would help reduce the trade gap.”
However, transportation is the main barrier to importing from the USA, as it requires large ships, he said, adding, “We need government support to address this issue.”
Massive tariff cuts to impact local businesses: Shams Mahmud
Shams Mahmud, President of the Bangladesh Thai Chamber of Commerce and Industry and Former President of DCCI, expressed concern that “Massive tariff reductions will have an impact on local businesses. As businessmen, we fear that harassment by the NBR may increase as they try to meet their revenue targets.”