April 14, 2025
DHAKA – We are deeply concerned about the escalating tariff war between the US and China which, according to experts, would not only negatively impact the world’s two largest economies but would also likely affect the entire global economy. Our main concern, however, lies with the challenges that Bangladesh’s RMG-export-dependent economy could face amid the trade war between these two giants.
On April 11, China reportedly imposed a 125 percent tariff on US goods in retaliation for President Trump’s increase of duties on Chinese goods to 145 percent. Earlier, on April 2, the US president imposed “reciprocal tariffs” ranging from 10 to over 50 percent on almost all countries.
Later, he paused the higher tariffs on most countries except China. Between March and April 9, US tariffs on Chinese goods rose from around 20 to 145 percent, while China’s tariffs on US goods increased from around 21 percent to 125 percent. Consequently, the Director-General of the World Trade Organization (WTO) Ngozi Okonjo-Iweala warned that “merchandise trade between these two economies could decrease by as much as 80 percent”—and since US-China trade together accounts for three percent of global trade, other economies would be negatively affected.
This is particularly true for countries that depend on these two trade giants. Bangladesh, for instance, relies heavily on the US market for its RMG exports. Although initially, Bangladesh was hit with a 37 percent tariff by the Trump administration, the 90-day pause in tariffs brought some relief.
However, if a recession hits the US, demand for clothing will likely decline, thereby hurting our exports. Moreover, the possible collapse of the WTO-led trade order—which has somewhat protected vulnerable economies—adds to the uncertainty facing Bangladesh.
If countries are left to fend for themselves, capturing export markets will depend solely on individual countries’ negotiating capacities, where more powerful and wealthier nations would have an inherent advantage.
Another concern for Bangladesh is an impending price war. Bangladesh will not be the only country seeking to diversify its markets if and when a US recession occurs. International competitors are likely to adopt similar strategies.
Even local competition to capture a shrinking RMG market is likely to hurt many companies within Bangladesh. It is, therefore, crucial for the government, diplomats, policymakers, and businesses to collaboratively develop innovative strategies to navigate these uncertain times and prepare for global economic turmoil.
Diversifying products and markets, forging bilateral and regional trade ties, encouraging foreign investments and joint ventures, and enhancing the country’s brand value must be explored creatively and with urgency. Proactive measures from all stakeholders are essential to make our economy more resilient to upcoming shocks.