The recent decision by the United States to reduce the countervailing tariff rate on Bangladeshi exports from 35% to 20% is a positive development for the country’s export sector. This revision comes as part of a broader restructuring of the US countervailing tariff framework, seemingly affecting a number of its trading partners.
For instance, Sri Lanka’s rate has been reduced to 20% (from 30%), and Pakistan’s to 19% (from 29%). Among Bangladesh’s other competitors, Vietnam and India currently face tariff rates of 20% and 25%, respectively.
In this context, Bangladesh’s revised rate in the US market is now comparatively aligned with that of its peers. This suggests a lower risk of trade diversion and, crucially, a reduced likelihood of major disruptions in ready-made garment exports.
However, a key uncertainty still lingers in the global trade landscape — the final US tariff decision on China. Given China’s central role in global manufacturing and its competitive overlap with Bangladesh in several export sectors, the rate Washington eventually sets for Beijing will significantly shape global trade flows. If the US imposes high tariffs on Chinese goods, demand may shift in favour of exporters from South and Southeast Asia, including Bangladesh.
Conversely, if China secures relatively favourable terms, competition will only intensify. In either case, the final tariff decision on China is set to be pivotal in reshaping the trajectory of global trade.
Although the reduced tariff rate brings short-term relief for Bangladesh, it also prompts the question: what has the country given in return? Some disclosures — such as agreements to import wheat, cotton, and aircraft — have surfaced.
It is reasonable to assume, however, that other sensitive concessions may have been made under confidentiality clauses and are unlikely to be made public any time soon. This situation underscores the urgent need for greater transparency, oversight, and long-term strategic planning in Bangladesh’s trade diplomacy.
This episode offers important lessons. It makes clear that Bangladesh must build greater resilience and stability into its external trade framework. Three strategic priorities emerge from this experience:
First, Bangladesh must intensify efforts to diversify its export basket and explore new markets. A narrow, product-concentrated export structure heavily reliant on a few destinations — especially the United States — exposes the economy to unnecessary risks.
Second, effective reforms in trade, taxation, and investment policy are needed to foster competitiveness and attract long-term foreign investment. Improving the regulatory environment and making it more business-friendly will position Bangladesh as a more stable and attractive trading partner.
Third, Bangladesh should now actively pursue targeted free trade agreements with emerging economies across Asia, Africa, and Latin America. Such agreements can serve as buffers against future protectionist pressures and help generate alternative export flows.
Thus, while the tariff reduction by the US is encouraging, it should not lead to complacency. Rather, it offers both an opportunity and a warning. Bangladesh must act swiftly and decisively to build a diversified, competitive, and resilient trade strategy.
The writer is the Executive Director of the South Asian Network on Economic Modeling (SANEM).
