On 02 April 2025, the US President Donald Trump slapped reciprocal tariffs through executive orders against some countries with whom the US has been experiencing huge trade deficits. Earlier, the US President imposed huge tariffs against Chinese goods imported into US while China also imposed retaliatory tariffs on US goods. Subsequently both countries engaged in tariffs war and have also hurled diatribes each other's and the tariffs war have reached climax following the unprecedented imposition of burgeoning tariffs against each other goods. Amid the tariffs war, The US has imposed of 145 percent tariffs on Chinese goods while china, in retaliation, imposed 125 percent tariffs against US goods leading to tension of world economic landscape.
Before ending of the tension and trade war between the two powerful nations, in an unprecedented move, the US President has imposed hefty reciprocal Tariffs on others countries from whom it imports bulk quantities of goods and has experienced huge trade gap. Being the leading exporters of ready-made garments to the US market, Bangladeshi products also has come under the US reciprocal tariffs with an imposition of 37 percent tariffs, up from average tariffs of 15.70 percent on Bangladesh's garments products earlier. Bangladesh being the huge exporters of ready-made garments to the US market, Economists and experts have opined that the US levied of excessive tariffs have a long-lasting and a serious impact on our exports as a result garments industry will suffer a lot which may lead a negative impact on our economy.
Of the Bangladesh exports basket, the ready-made garments products account for 85 percent. Of the total exports volume, Bangladeshi garments exports to US Market consists of almost 20 percent, one fifth of our total exports volume. Last year Bangladesh exported staggering USD 8.44 billion worth of garments products to the US. Just after announcement of the reciprocal tariffs on Bangladesh along with other countries by the US President, Bangladesh interim government headed by Dr. Muhammad Yunus promptly addressed the matter and took decision wrote to US president office and concerned department to hold this excessive tariffs imposition for 3 months so that it can take measures to minimize trade gap between Bangladesh and the USA. It would be pertinent to mention that Bangladesh exported USD 8. 44 billion whereas it imported USD 2 .42 billion where Bangladesh leading the position. However, the US President later announced to hold the retaliatory Tariffs enforcement for 03 months not only for Bangladesh but for all the nations except for China which was supposed to take effect from 09 April 2025.
Rates of reciprocal tariffs on other countries by trump administration:
The US has imposed reciprocal tariffs to those countries who are enjoying reduced tariffs benefits exporting goods to the US market but imposing high tariffs on US imported goods to their own countries. The US President's announcement of reciprocal tariffs comes up with different tariffs rates to different countries. US imposed 37 percent tariffs on Bangladeshi ready-made garments while our rivals' countries also had comparatively high tariffs than Bangladesh. Bangladesh
Why US president Donald Trump has levied reciprocal tariffs against countries after assuming power in his second term. This is because, the US President during his election campaign pleaded that he would do his best to protect his country's industries such as Aluminum, agricultural industries to save farmers and revive his manufacturing sectors etc. US industry has been heavily impacted on Chinese products. It has been losing the competitiveness against Chinese products and EU products. Moreover, the country wants to revive the manufacturing sector in order to reduce the unemployment situation. The U.S. administration justifies these tariffs as a response to what it perceives as unfair trade practices by its partners, including high tariffs on U.S. goods, non-tariff barriers, and currency manipulation.
US imposition of Reciprocal Tariff Rate to some countries are shown below: Bangladesh 37%, India 26%, Pakistan 29%, Vietnam 46%, Cambodia 49%, Laos 48%, China 34% (initial), escalated to 125% during trade dispute, European Union 20%
Once the reciprocal tariffs come into effect, Bangladesh will loss US market due to lack of competiveness and rising price of ready-made garments. The US customer will have to ultimately bear the burden ofprice hike of products due to reciprocal tariffs. Moreover, hike of the garment products will prompt US buyers to look for sourcing from alternative market wherethe countries enjoy lower tariffs for readymade garments. It would have a devastating impact on our economy. The garment sector is the life blood of our economy. Of our export basket more than 85 percent export earnings have been generating from ready-made garments exports to different destination and big portion has been exporting to US and EU countries. Almost 4 million people involve in the sector and the majority of them are women. It is highly labor intensive sector and remain in the advantageous position due to the low cost of labors. India and Pakistan were imposed less tariffs than that of Bangladesh. so buyers will now divert their attention from Bangladesh to those countries. Some African countries due to various agreement will enjoy less tariffs compare to Bangladesh. so it has been predicted that Bangladesh will loss competiveness and market will be captured by other competitors. However, some experts opined that due to the reciprocal tariffs levied Bangladesh will still remain attractive destinationand competitive due to its long experience and expertise in the sector, low cost labor force etc.
After the imposition of the reciprocal tariffs, many seminar, roundtables, symposium and talk show have been organized and participated by the local think tanks, Experts and economists, where they suggest that the government should take short term and long term initiatives to address the tariffs issue. They have also recommended for the diversifications of market and our products rather than highly relying on garments products and US and EU markets. However, it is not possible to diversify the market and export products short period of timeand need long term initiatives. The Government should focus on making free trade agreement with other countries and organizations so that we can explore new market and diversify our export basket.
The writer is a Banker
