Trade war may cut global demand, Bangladesh exports to take a hit: Mustafizur

The new tariffs imposed by the United States are unlikely to bring any major changes in market competition, as similar tariffs have been imposed on Bangladesh’s competitor countries, some even at higher rates, according to Prof Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD).  

Speaking to The Business Standard today (3 April), he noted that the Trump administration’s decision could lead to higher inflation in the US and a potential slowdown in its economic growth. “This, in turn, could reduce demand in the US market, while a global trade war may further shrink demand worldwide, negatively affecting Bangladesh’s exports.”

In this context, he emphasised the need to boost Bangladesh’s productivity and engage in negotiations with the US.

Regarding the US claim that US exports to Bangladesh face a 74% tariff, Mustafizur questioned the calculation method, saying, “It is important to understand how the US arrived at this figure.”

Earlier today, US President Donald Trump announced that the US is imposing reciprocal tariffs to match duties put on US goods by other countries, in a move that ratchets up a trade war that he kicked off on his return to the White House.

During an event in the White House Rose Garden, the US president displayed a poster that listed reciprocal tariffs, including 37% on Bangladesh, as a response to duties put on US goods.

Trump also said he would impose a 10% baseline tariff on all imports to the US and higher duties on some of the country’s biggest trading partners.

“Bangladesh is the fifth-largest market for US cotton exports, and there is no tariff on cotton imports. The country also imports scrap from the US at a zero tariff. However, there is a 31% tariff on petroleum gas imports.

“These are the major imported commodities. So, why is the US mentioning a 74% tariff? This needs to be clarified,” explained the economist.

Additionally, he pointed out that the US has indicated special benefits for countries using American commodities in their exports. Since Bangladesh uses US cotton to manufacture apparel for export, he suggested that this issue be raised in Trade and Investment Cooperation Forum Agreement (TICFA) talks.

Furthermore, he recommended that Bangladeshi brands and buyers inform the Trump administration that Bangladesh’s apparel exports, including those to the US, rely on American cotton.