A seismic shift has rocked Bangladesh’s economic landscape following Washington’s decision to impose a 35 percent reciprocal tariff, a slight reduction from the initial 37 percent proposed in April. This tariff announcement has not only rattled the core of Bangladesh’s industrial sector but has also marked a critical juncture, testing the nation’s resilience as the economic lifeline faces significant strain.
The impact of this tariff is starkly evident in the numbers. More than 800 businesses, reliant on the American market, now face a “high risk” status. Among them, a core group of 168 companies that exclusively export to the US are on the brink of survival. Last year, these companies collectively exported a substantial $5.05 billion worth of goods to the US, now facing a formidable barrier. The competitive landscape has darkened as the original average duty of 15 percent is now compounded by the new 35 percent levy, resulting in a crippling 50 percent total tariff burden.
While Vietnam acted swiftly to negotiate a more favorable 20 percent tariff, Bangladesh’s delayed response has left it at a significant disadvantage. Economists are warning of a severe economic blow that could extend from apparel to various other sectors like footwear, furniture, and food products. This crisis not only threatens businesses but also poses a looming social catastrophe with the potential for mass job losses, particularly affecting millions of female workers who are primary breadwinners in their families.
The initial tremors of this economic earthquake were felt with a sharp decline in the Dhaka Stock Exchange. Industry leaders are expressing profound concerns over the imminent collapse of long-standing relationships with US buyers. The lack of proactive government intervention and effective negotiation strategies have left many businesses vulnerable to the impact of these tariffs.
Bangladesh’s heavy reliance on a single market has now come back to haunt as the nation finds itself unprepared for the current predicament. The government’s slow and passive approach to addressing trade challenges has been criticized as a significant failure, resulting in missed opportunities to safeguard the export economy. The need for a swift and strategic diplomatic response has never been more urgent to prevent further economic repercussions.
As Bangladesh stands on the brink of marginalization, a renewed focus on diplomatic efforts and strategic concessions akin to Vietnam’s approach is imperative. Diversification of the export basket beyond traditional sectors like apparel is crucial for long-term sustainability. Investment in emerging sectors such as pharmaceuticals, IT, and agro-processing is essential, along with forging new trade alliances to bolster the nation’s competitive position.
The 35 percent reciprocal tariff imposed by the US serves as a wake-up call for Bangladesh, highlighting the urgent need for economic diversification and strategic planning. The upcoming period will define whether Bangladesh can adapt and thrive in the face of adversity, or succumb to the consequences of unpreparedness.