Global trade landscape has undergone significant shifts in recent years, particularly with the tariff war initiated by current US President Donald Trump.
He took instant decisions on tariff imposition after assuming office, imposing sweeping tariffs on imports from major economies like China, Mexico, and Canada, aiming to reduce trade deficits and boost domestic manufacturing.
However, these policies triggered retaliatory tariffs, leading to a chain reaction that reshaped global trade dynamics.
Canada has already declared counter-tariffs on US products, and there is strong speculation that China and Mexico may follow suit with similar measures.
Additionally, Donald Trump has threatened to widen the scope of his trade tariffs, warning that the European Union – and potentially the UK – could also face levies. While he acknowledged that Americans might bear some of the economic brunt of this global trade war, the broader impact on international markets remains uncertain.
This escalating trade conflict adds further uncertainty to the global economic landscape.
While many economies suffered from these disruptions, Bangladesh stands at a crossroads, with both challenges and significant opportunities arising from the situation.
The escalation of trade tensions between the world's largest economies has disrupted supply chains, increased costs for consumers, and forced businesses to reassess their sourcing strategies.
Companies that previously relied on Chinese manufacturing faced higher import duties in the United States, prompting them to explore alternative manufacturing hubs.
This shift has provided an opportunity for emerging economies like Bangladesh to position themselves as viable alternatives for sourcing and production.
In addition, retaliatory measures by China, Canada, and Mexico have led to broader economic instability.
The uncertainty has resulted in reduced investments, slower GDP growth in affected nations, and volatility in currency markets.
However, sectors like textiles and ready-made garments (RMG), where Bangladesh is a major player, have remained relatively resilient due to their necessity for global consumption.
Bangladesh, as the world’s second-largest exporter of ready-made garments, can capitalise on the changing trade landscape.
With China facing higher tariffs on exports to the US, many global buyers are actively seeking alternative sourcing destinations with cost-effective production and favourable trade agreements.
Bangladesh, benefiting from lower tariff rates compared to China and Mexico, has the potential to expand its export share in the US and other Western markets.
Additionally, the tariff war has prompted companies to diversify their production bases to mitigate risks associated with over-reliance on a single country.
This creates an opportunity for Bangladesh to attract foreign direct investment (FDI) from investors looking for stable and competitive manufacturing environments.
Countries like the United States, China, and Canada may look to Bangladesh as a strategic location for manufacturing to bypass high tariff barriers imposed elsewhere.
To fully leverage the opportunities arising from the tariff war, Bangladesh must take several strategic initiatives.
Bangladesh must enhance its port efficiency, transportation infrastructure, and customs processes to ensure seamless export operations.
Delays in shipments can deter international buyers, making it essential to modernise logistics.
Bangladesh should accelerate the development of Special Economic Zones (SEZs) and industrial parks to attract foreign investors seeking alternatives to China and Mexico.
These zones should offer streamlined regulations, tax incentives, and world-class infrastructure.
While garments remain the dominant export sector, Bangladesh should expand its focus to include pharmaceuticals, electronics, and IT services to create a more resilient export base.
Predictable trade policies, regulatory transparency, and stable energy pricing are crucial for maintaining investor confidence.
Avoiding abrupt policy changes, such as sudden hikes in gas prices, will help sustain business growth. Engaging in trade negotiations with the US, the European Union, and other key markets to secure preferential trade agreements will be essential.
Bangladesh should advocate for the reinstatement of its GSP (Generalized System of Preferences) benefits in the US.
While opportunities exist, there are risks Bangladesh must navigate carefully.
If the global economy slows down due to prolonged trade conflicts, demand for exports could weaken, impacting Bangladesh’s growth.
Additionally, regional competitors like Vietnam and India are also aggressively positioning themselves to attract investment and trade benefits.
Without proactive policy measures, Bangladesh may lose out on these advantages.
The global tariff war has altered international trade dynamics, presenting both challenges and opportunities.
Bangladesh, with its strong foothold in the garment industry and cost-competitive labour market, has a golden opportunity to capitalise on shifting trade patterns.
However, realising this potential will require strategic policy actions, infrastructure development, and a favourable business climate.
If managed effectively, Bangladesh can emerge stronger in the global trade arena, securing long-term economic growth and stability.
