U.S. Reciprocal Tariffs: Implications for Bangladesh
This policy brief examines the impact of the newly imposed U.S. reciprocal tariffs on Bangladesh. The analysis highlights how the tariffs, though appearing to confer a relative advantage over competitors such as India and China, have raised absolute duty levels to such an extent that U.S. import demand is likely to be significantly depressed and profit margins for suppliers could be severely constrained. Simulation results deriving from a computable general equilibrium framework, known as the GTAP model, show U.S. apparel import demand to fall by 12 per cent or approximately $10 billion. The resultant impact on Bangladesh’s apparel exports to the United States is a decline by 14 per cent or equivalent to above $1.0 billion. Rival suppliers also experience sharp export contractions. Exports prospects in other markets are also affected with the gains in the European Union being modest and accompanied by downward pressure on prices. This policy brief argues that reciprocal tariffs intensify the urgency for reform to strengthen external competitiveness, secure durable access through trade agreements, and promote product and market diversification, and these measures need to be integrated into a coherent LDC graduation strategy aimed at sustaining export growth and building resilience against external shocks.