US president-elect Donald Trump’s proposed tariffs on Mexico, Canada, and China have the potential to reshape global trade dynamics significantly.
By disrupting supply chains and increasing production costs, these measures would create ripple effects across the global economy.
For countries like Bangladesh, this disruption could open new opportunities in the US market, but the situation also brings challenges tied to global economic shifts.
On Monday (25 November), Trump said on his social media handle that he’ll impose a 25% tariff rate on all imports from Mexico and Canada on the first day of his presidency and will impose an additional 10% tariff rate on all imports from China on top of other tariffs.
The imposition of a 25% tariff on imports from Mexico and Canada and a 10% tariff on Chinese goods would severely disrupt established trade networks.
For Mexico and Canada, deeply integrated into US supply chains under the USMCA (formerly NAFTA), these tariffs would undermine cross-border manufacturing, increase costs, and likely lead to retaliatory measures.
In the case of China, tariffs would escalate the trade tensions already heightened by the US-China trade war.
This would force global manufacturers to reconsider sourcing from China, shifting production to other nations with competitive labour costs.
Such shifts could reconfigure global supply chains, giving rise to opportunities for alternative suppliers like Vietnam, India, and Bangladesh.
Global markets would also face heightened volatility.
Tariffs could lead to higher inflation in the US, disrupt industrial production, and slow global trade.
Export-dependent economies would particularly feel the strain, as access to the US market becomes more expensive and uncertain.
Bangladesh’s export industry, particularly its apparel sector, stands to gain significantly.
As one of the US’s largest suppliers of ready-made garments (RMG), Bangladesh could benefit from reduced competition from China.
The apparel sector accounts for over 80% of the country’s total exports, and any decline in Chinese exports to the US could prompt buyers to source more from Bangladesh.
Beyond apparel, other sectors like leather, ceramics, and jute goods could also see growth, as the US looks to diversify its sourcing.
This presents a rare opportunity for Bangladesh to expand its export portfolio and deepen its footprint in the American market.
Opportunity comes with a set of obstacles
Despite the prospects, Bangladesh faces hurdles.
Infrastructural inefficiencies, such as port congestion and inadequate transportation networks, could limit its ability to handle increased demand.
High cost of doing business and delays in production and delivery could deter potential buyers.
Another challenge lies in compliance with international labour and environmental standards.
US buyers, under scrutiny for ethical sourcing, will demand greater adherence to global standards, areas where Bangladesh has faced criticism in the past.
Failure to meet these expectations could undermine its ability to capitalise on new opportunities.
The tariffs could also indirectly raise input costs for Bangladeshi manufacturers.
As Bangladesh imports a significant portion of raw materials, especially textiles and machinery, from China, disruptions in Chinese exports could lead to higher prices for these inputs.
While the US tariffs could bring short-term benefits to Bangladesh’s exports, there are long-term risks.
Increased dependence on the US market could expose Bangladesh to future policy shifts, including stricter trade terms.
Furthermore, navigating its relationship with China, a key investor and trading partner, will be critical to maintaining economic stability and avoiding geopolitical complications.
To balance these risks, Bangladesh must focus on improving its infrastructure, diversifying its export base, and enhancing its trade compliance standards.
Expanding trade partnerships with other regions, such as the EU, ASEAN, and the Gulf countries, will also help reduce over-reliance on the US market.
Trump’s tariffs would reverberate across the global economy, disrupting supply chains and creating new trade dynamics.
For Bangladesh, the shift could bring substantial opportunities, especially in the apparel sector, but these come with risks tied to global economic uncertainty and local constraints.
By addressing structural weaknesses and embracing a strategic approach, Bangladesh can position itself to benefit from the changing global trade landscape while safeguarding its long-term economic interests.
