By: Tanbir Hasan (Sanid), Reveree(Fashion Starts Here), Chairman
Export diversification has been a high priority policy objective in Bangladesh. The current situation provides an appropriate context of the potential impact of U.S. tariffs on garment exports, the implications of Bangladesh’s upcoming graduation from the Least Developed Country (LDC) status, strategies for sustainable industry growth, diversification into value-added products, and the possible effects of the global economic situation challenges.
Given the urgency of the current economic situation, focusing on trade policy issues and improving export competitiveness should be a central part of Bangladesh’s reform agenda.
Bangladeshi companies can implement short-term strategies, there are steps policymakers can take to minimise supply chain risks and broader economic impacts.
With over 70 per cent of the country’s merchandise exports currently benefiting from LDC-specific trade preferences, the impact of Bangladesh’s impending LDC graduation on its export sector, particularly the dominant RMG industry, is a significant concern.
LDC-specific market access conditions have since helped increase its share to almost 13 per cent in both the EU and Canada. However, in the US, where Bangladesh does not receive preferential access, the market share grew to just 6.8 per cent. Bangladesh also expanded its reach to Australia and Japan, benefiting from LDC preferences, growing from a negligible presence to holding 11 per cent of the Australian market and 4 per cent in Japan. This growth underlines the importance of LDC preferences for Bangladesh’s apparel exports, which face higher-than-average MFN tariffs in importing countries.
While the impact of US tariffs on the Bangladesh economy is expected to be negative, warns against reactionary protectionist policies that could have long-term consequences for Bangladesh economy. Instead, advocates for temporary, targeted support measures to cushion the immediate impact while recognising opportunities for trade diversification .
“Maintaining competitiveness and strategic adaptability will be key to navigating these challenges as the global trade landscape shifts.
