Bangladesh Risks Market Share as US Tariff Deadline Nears

Once considered a rising star in global trade, Bangladesh now faces a looming challenge as former US President Donald Trump’s sweeping tariff measures threaten to unravel Dhaka’s long-standing ‘win-win’ relationship with Washington.

Economists and business leaders fear Bangladesh is on the verge of losing its preferential position in the US market following Trump’s announcement of a 35% tariff on Bangladeshi goods, set to take effect on August 1.

Back in April, the US initially announced a 37% tariff, then granted a 90-day negotiation window which ends on Wednesday (July 9). On Monday, Trump slightly revised the rate, reducing it by only 2%. Many fear this marginal concession is too little, too late.

The garment industry — Bangladesh’s largest export sector — is expected to take the hardest hit, especially as key competitor Vietnam successfully negotiated a tariff cut from 46% to 20% by agreeing to remove all duties on US imports.

Despite the same 90-day window, Bangladesh made no significant progress, analysts say.

“We assumed we had a win-win relationship, but that opportunity has slipped away,” said Dr Mahfuz Kabir, Research Director at the Bangladesh Institute of International and Strategic Studies (BIISS). “Bangladesh must act within the week to salvage the situation.”

He warned that if India and Pakistan secure concessions through bilateral talks while Bangladesh delays decisions, it could face serious consequences in the US market.

Trump’s letter — sent to Chief Adviser Muhammad Yunus and 13 other world leaders — was shared on his platform Truth Social, with only the names and tariff percentages altered for each country. He cited “tariff and non-tariff barriers” and a “long-term trade imbalance” as justification.

Starting August 1, all categories of Bangladeshi exports to the US will be subject to the 35% flat tariff, alongside existing sector-specific duties. The new measure also applies to re-routed goods via third countries to prevent transshipment circumvention.

Trump warned that any retaliatory tariffs by Bangladesh would result in further increases by the US.

Many within the business community believe it’s now too late to negotiate meaningful relief. Questions have also been raised about the strength of Bangladesh’s negotiation efforts.

Ashraf Ahmed, Director at the Dhaka Chamber of Commerce and Industry (DCCI), said: “Our offers regarding LPG, soybean, and cotton imports weren’t attractive enough. Major US apparel buyers have already stockpiled, which could lead to reduced new orders.”

However, there remains a glimmer of hope.

Finance Adviser Dr Salehuddin Ahmed expressed cautious optimism, saying, “There is still a chance the tariff could be reduced through ongoing dialogue.”

Speaking to reporters at the Secretariat on Tuesday, he confirmed the Commerce Secretary is heading to Washington to join Bangladesh’s delegation.

“Talks were held with the US Trade Representative (USTR) on Sunday. Another session is scheduled for tomorrow. One-on-one discussions may still yield results,” he said.

According to US Department of Commerce data, Bangladesh exported $8.37 billion worth of goods to the US in 2024, of which $7.06 billion came from apparels — making the sector most vulnerable to the tariff hike.

Fazlee Shamim Ehsan, Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said: “Tomorrow’s meeting is critical. If it goes well, there is still a strong chance of lowering the tariff.”

He also cautioned that Bangladesh should remain alert to shifting dynamics. Although India currently faces a 27% tariff, there is speculation that Trump may impose an additional 10% on BRICS nations, which includes India.

“If the US reaches a trade deal with China, it could put us at a disadvantage. However, if high tariffs remain on China — especially — we might still find room to benefit,” said Ehsan.

When asked Monday if the US would remain open to further talks, Trump offered no clear answer. However, the letter includes a conditional statement:

“If you wish to open your heretofore closed Trading Markets to the United States, and eliminate your Tariff and Non-Tariff, Policies and Trade Barriers, we will, perhaps, consider an adjustment to this letter.”

This wording gives experts some hope that the door to negotiation is not fully closed — at least until the final deadline.

Economists and business leaders agree: Bangladesh must act swiftly and decisively in the few days remaining to avert major setbacks from the impending US tariff regime.