When US President Donald Trump imposed a 37 percent retaliatory tariff on select Bangladeshi goods, it sent shockwaves through the country’s export-driven economy, particularly the ready-made garment (RMG) sector, the backbone of Bangladesh’s global trade.
After months of high-level dialogue and diplomatic effort, the only outcome has been a modest reduction—from 37 to 35 percent. While technically a concession, it provides little practical relief for exporters now grappling with deep uncertainty and competitive disadvantage in the U.S. market.
According to the National Board of Revenue, more than 800 Bangladeshi companies export over half of their products to the United States. Among them, a significant number rely almost exclusively on the U.S. market. With the new tariffs set to take effect from August 1, their business models are now under threat. Fortune Apparels, based in Chattogram, exported over $33 million worth of garments entirely to the U.S. last fiscal year. The stakes are even higher as buyers like Walmart reassess sourcing strategies—often shifting toward countries like Vietnam, which has secured a more favorable 20 percent tariff rate.
The U.S. accounted for around 58 percent of export earnings from these high-exposure firms, totaling over $5 billion in the last fiscal year. This heavy dependence on a single market, without diversified export destinations, leaves the sector acutely vulnerable to external policy shifts. The retaliatory tariff has laid bare this structural weakness.
The modest two percent reduction in tariffachieved after nearly three months of negotiation, feels underwhelming. Multiple high-level exchanges, including a direct letter from Bangladesh’s Chief Adviser to the U.S. President, aimed to defuse the crisis. Yet, the result barely narrows the competitive gap. Meanwhile, countries like Vietnam continue to enjoy more advantageous rates, placing Bangladeshi exporters at a clear disadvantage.
What makes matters worse is the lack of transparency surrounding the negotiation process. Crucial questions remain unanswered. What were the U.S. demands? What were Bangladesh’s counteroffers? What provisions were included in the draft framework agreement? None of this has been clearly communicated—prompting concern that a broader, more inclusive consultation could have led to a better outcome.
While officials have cited non-disclosure clauses as a reason for the opacity, the situation called for a more strategic approach. A negotiation team comprising trade experts, legal advisors, industry leaders, and diplomats could have enhanced Bangladesh’s bargaining power. Instead, a narrow and centralized approach appears to have hampered the effectiveness of the negotiations.
If the 35 percent tariff takes effect as planned, many exporters may find themselves uncompetitive almost overnight. In the short term, this could mean shrinking orders and canceled contracts. In the longer term, foreign buyers may begin shifting permanently to more cost-effective suppliers. Once lost, these market linkages will be difficult to recover—especially amid rising global competition and increasing price pressures.
While the government has taken some measuressuch as offering targeted tariff relief in the 2025–26 budget and holding discussions on non-tariff barriers like IP laws and investment regulations—these efforts may prove insufficient in isolation. The challenge demands a more proactive, transparent, and inclusive strategy.
Bangladesh must now rethink its approach to trade diplomacy. A robust, inclusive negotiation framework is essential. Involving trade economists, legal experts, and private sector representatives can yield more effective outcomes. Bangladesh must also pursue tariff parity with competitors like Vietnam. If others can secure 20 percent rates, there is no justification for Bangladesh to accept significantly worse terms.
Export diversification is no longer optional, it is essential. Relying on a single market like the U.S. exposes the economy to undue risk. Expanding trade with the EU, Canada, and emerging markets in Asia and Africa can help spread that risk. Additionally, the government must ensure transparency in trade negotiations. Keeping stakeholders informed not only strengthens trust but also builds national preparedness for external shocks.
Bangladesh has overcome major economic challenges in the past. But this is different—it strikes at the core of our most vital export sector. If handled with seriousness, unity, and strategic foresight, this crisis could become a transformative moment—ushering in a stronger, more diversified, and resilient export strategy.
The writer is a Special Correspondent at News24 Television and a talk show host. He can be reached at reporterbabu1971@gmail.com
