Trump's tariffs an opportunity for Bangladesh to reduce trade deficit, diversify exports

By Md. Abu Saim*

U.S. President Donald Trump’s administration imposed a 37% tariff on Bangladeshi exports to the United States but granted a 90-day exemption as part of a temporary easing of trade restrictions for several countries. This provides Bangladesh with a critical window to reassess its trade policies and address its reliance on the U.S., which accounts for a significant portion of its export revenue.

The tariff primarily affects Bangladesh’s ready-made garment sector, which generates over 90% of the country’s foreign exchange earnings from the U.S. and employs approximately four million people. A sudden imposition of the tariff could disrupt employment, foreign currency reserves, and economic stability. The exemption offers temporary relief but underscores the need for Bangladesh to reduce its trade deficit with the U.S. and mitigate risks associated with dependence on a single market.

In response, Bangladesh, through Professor Yunus’s diplomatic efforts, has proposed measures to align with U.S. trade interests and address the trade imbalance, which stood at $8.4 billion in exports to the U.S. versus $2.2 billion in imports in 2024. These measures include increasing imports of U.S. agricultural products like cotton, wheat, corn, and soybean, establishing a duty-free bonded warehouse for U.S. cotton, implementing a zero-tariff policy on U.S. scrap metals and agricultural imports, gradually reducing tariffs on U.S. goods such as gas turbines, semiconductors, and medical equipment from 70–74% to 45–50%, eliminating non-tariff barriers like complex testing and packaging requirements, and facilitating U.S. tech sector entry, notably through the launch of Starlink in Bangladesh. These steps aim to strengthen bilateral trade relations and encourage the U.S. to lower the proposed tariff to 15–25%.

The U.S. has cited its trade deficit with Bangladesh as a key concern, viewing it as a challenge to national interests amid protectionist policies. Bangladesh’s commitment to reducing the deficit through increased U.S. imports and tariff reductions could foster reciprocity but poses domestic challenges. Lowering tariffs may lead to government revenue losses and heightened competition for local producers, requiring careful balancing of domestic and international priorities. Additionally, Bangladesh’s reliance on U.S. trade policies highlights the risks of political trade dependence, where external policy shifts can significantly impact the economy.

Bangladesh’s heavy reliance on the ready-made garment sector and the U.S. market increases its vulnerability to global trade fluctuations. To enhance resilience, the country is exploring diversification into ICT and semiconductors by leveraging a young, tech-savvy workforce to develop software, outsourcing, and semiconductor industries; expanding into high-margin services like customer support, virtual assistance, and educational services; promoting labor-intensive sectors such as leather goods, handicrafts, ceramics, and light engineering tools to absorb workers and reduce garment dependence; and developing homegrown brands to increase the value of exports through investments in design and digital marketing.

To implement these strategies, Bangladesh must undertake structural reforms, including strengthening export credit and insurance systems to support new industries, investing in education and skills training for ICT and service sectors, upgrading port and logistics infrastructure to meet global standards, and formulating a national trade diversification strategy with clear targets. The introduction of Starlink and openness to collaboration in civil aviation and defense sectors signal a shift toward high-value, technology-driven partnerships, potentially reducing reliance on commodity exports.

The U.S. tariff and subsequent exemption highlight Bangladesh’s exposure to external trade pressures due to its concentrated export sector and market reliance. The 90-day window provides an opportunity to implement strategic reforms, reduce the trade deficit, and diversify exports. By addressing structural challenges and pursuing new trade avenues, Bangladesh can enhance its economic resilience and position itself for sustainable growth in a dynamic global trade environment.

---

*Formerly with the Dhaka University

Comments

Modi’s Israel visit strengthened Pakistan’s hand in US–Iran truce: Ex-Indian diplomat

By Jag Jivan M. K. Bhadrakumar , a career diplomat with three decades of service in postings across the former Soviet Union, Pakistan, Iran, Afghanistan, South Korea, Sri Lanka, Germany, and Turkey, has warned that the current truce in the US–Iran war is “fragile and ridden with contradictions.” Writing in his blog India Punchline , Bhadrakumar argues that while Pakistan has emerged as a surprising broker of dialogue, the durability of the ceasefire remains uncertain.

Manufacturing, services: India's low-skill, middle-skill labour remains underemployed

By Francis Kuriakose* The Indian economy was in a state of deceleration well before Covid-19 made its impact in early 2020. This can be inferred from the declining trends of four important macroeconomic variables that indicate the health of the economy in the last quarter of 2019.

Incarceration of Prof Saibaba 'revives' the question: What is crime, who is criminal?

By Kunal Pant* In 2016, a Supreme Court Judge asked the state of Maharashtra, “Do you want to extract a pound of flesh?” The statement was directed against the state for contesting the bail plea of Delhi University Professor GN Saibaba. Saibaba was arrested in 2014, a justification for which was to prevent him from committing what the police called “anti-national activities.”

Why Indo-Pak relations have been on 'knife’s edge' , hostilities may remain for long

By Utkarsh Bajpai* The past few decades have seen strides being made in all aspects of life – from sticks and stones to weaponry. The extreme case of this phenomenon has been nuclear weapons. The menace caused by nuclear weapons in the past is unforgettable. Images of Hiroshima and Nagasaki from 1945 come to mind, after the United States dropped two atomic bombs on the cities.

Food security? Gujarat govt puts more than 5 lakh ration cards in the 'silent' category

By Pankti Jog* A new statistical report uploaded by the Gujarat government on the national food security portal shows that ensuring food security for the marginalized community is still not a priority of the state. The statistical report, uploaded on December 24, highlights many weaknesses in implementing the National Food Security Act (NFSA) in state.

The soundtrack of resistance: How 'Sada Sada Ya Nabi' is fueling the Iran war

By Syed Ali Mujtaba* The Persian track “ Sada Sada Ya Nabi ye ” by Hossein Sotoodeh has taken the world by storm. This viral media has cut across linguistic barriers to achieve cult status, reaching over 10 million views. The electrifying music and passionate rendition by the Iranian singer have resonated across the globe, particularly as the high-intensity military conflict involving Iran entered its second month in March 2026.

Lata Mangeshkar, a Dalit from Devdasi family, 'refused to sing a song' about Ambedkar

By Pramod Ranjan* An artist is known and respected for her art. But she is equally, or even more so known and respected for her social concerns. An artist's social concerns or in other words, her worldview, give a direction and purpose to her art. History remembers only such artists whose social concerns are deep, reasoned and of durable importance. Lata Mangeshkar (28 September 1929 – 6 February 2022) was a celebrated playback singer of the Hindi film industry. She was the uncrowned queen of Indian music for over seven decades. Her popularity was unmatched. Her songs were heard and admired not only in India but also in Pakistan, Bangladesh and many other South Asian countries. In this article, we will focus on her social concerns. Lata lived for 92 long years. Music ran in her blood. Her father also belonged to the world of music. Her two sisters, Asha Bhonsle and Usha Mangeshkar, are well-known singers. Lata might have been born in Indore but the blood of a famous Devdasi family...

'Batteries now cheap enough for solar to meet India's 90% demand': Expert quotes Ember study

By A Representative Shankar Sharma, Power & Climate Policy Analyst, has urged India’s top policymakers to reconsider the financial and ecological implications of the country’s energy transition strategy in light of recent global developments. In a letter dated April 10, 2026, addressed to the Union Ministers of Finance, Power, New & Renewable Energy, Environment, Forest & Climate Change, and the Vice Chair of NITI Aayog, with a copy to the Prime Minister, Sharma highlighted concerns over India’s ambitious plans for coal gasification and the Prototype Fast Breeder Reactor (PFBR).

Labour unrest in Manesar trigger tensions: Recently enacted labour codes blamed

By A Representative A civil rights coalition has expressed concern over recent developments in the industrial hub of Manesar in Haryana, where a series of labour actions and police responses have drawn attention. A statement, released by the Campaign Against State Repression (CASR), said it stood in solidarity with workers in IMT Manesar and other parts of the country, while also alleging instances of police excess during ongoing unrest.

Search This Blog