Originally posted in The Business Standard on 3 April 2025
Prof Mustafizur Rahman noted that the Trump administration’s decision could lead to higher inflation in the US and a potential slowdown in its economic growth
The new tariffs imposed by the United States are unlikely to bring any major changes in market competition as similar tariffs have been imposed on Bangladesh’s competitor countries, some even at higher rates.
The Trump administration’s decision could lead to higher inflation in the US and a potential slowdown in its economic growth. This, in turn, could reduce demand in the US market, while a global trade war may further shrink demand worldwide, negatively affecting Bangladesh’s exports.
In this context, Bangladesh needs to boost productivity and engage in negotiations with the US.
Besides, it is important to understand how the US arrived at the figure that US exports to Bangladesh face a 74% tariff.
Bangladesh is the fifth-largest market for US cotton exports, with no tariffs on cotton imports. Bangladesh also imports scrap from the US duty-free. However, petroleum gas imports are subject to a 31% tariff.
These are the major imported commodities. So, why is the US mentioning a 74% tariff? This needs to be clarified.
The US has indicated special benefits for countries using American commodities in their exports. Since Bangladesh uses US cotton to manufacture apparel for export, this issue should be raised in Trade and Investment Cooperation Forum Agreement (Ticfa) talks.
Furthermore, Bangladeshi brands and buyers should inform the Trump administration that Bangladesh’s apparel exports, including those to the US, rely on American cotton.
Mustafizur Rahman is a distinguished fellow at CPD