US tariff intended for China and EU, not for LDCs

Renowned economist Dr. Debapriya Bhattacharya on Saturday said Bangladesh should not worry about the recently-proposed US reciprocal tariff policy but rather view it as an opportunity.

He said that the US tariff measures are primarily aimed at specific countries and regions-such as China and the European Union-and are not intended to target Least Developed Countries (LDCs) and Bangladesh.

"As the US focuses on China and Vietnam, Bangladesh has an opportunity, especially in apparel manufacturing," Dr. Bhattacharya, also distinguished fellow of the Centre for Policy Dialogue (CPD) said while delivering his keynote paper titled "The Toxic Tariff Therapy: Status and Outlook."

He was speaking at a seminar titled "US Reciprocal Tariff and the Way Forward for Bangladesh", jointly organised by the Dhaka Chamber of Commerce and Industry (DCCI) and the Business Initiative Leading Development (BUILD) held at the former's headquarters in Motijheel, Dhaka.

The distinguished fellow said: "I say with responsibility that the impact of these tariff impositions will fall more heavily on our competitors. As a result, we will gain comparative advantage."

He pointed out that Bangladesh is not among the "Dirty 15"-a group of countries with the highest positive trade balances against the United States. Beyond ready-made garments (RMG), Dr. Bhattacharya identified leather and pharmaceuticals as sectors with strong export potential.

He slammed the US policy for relying on goods trade deficits as the basis for imposing tariffs, arguing that it overlooks the growing importance of the global services sector. "The policy is flawed both in its economic rationale and execution," he said.

"The tariffs imposed under the current US administration are more political than economic. I seriously doubt whether the counter-tariff policy will succeed. Markets are unlikely to accept this approach."

He explained that using the goods trade deficit as an index for setting tariffs is ineffective. "Trade deficits are not static. If tariffs are recalculated annually based on fluctuating deficits, this will reduce predictability and harm investment. Disaster can also present opportunities. This is a chance to implement the long-discussed trade and economic reforms."

Commerce Secretary Mahbubur Rahman, who attended the event as the chief guest, said Bangladesh is engaging in bilateral discussions with the US rather than multilateral ones on the tariff issue. "So far, we believe Bangladesh is on the right track, although we haven't yet officially raised the agenda at the World Trade Organization (WTO)," he said.

Mr. Rahman mentioned that negotiations are ongoing with the US on a list of 100 products. He also noted that Bangladesh will raise the issue of US goods being imported through third countries like Singapore, the UAE, and India.

"If the US doesn't respond positively, we will consider amending our import policy to ban such third-country imports," he warned, citing the example of existing rules on car imports. He also said the government is working to remove other trade barriers, including the current requirement for radioactivity testing.

President of the International Chamber of Commerce (ICC) Bangladesh Mahbubur Rahman, who was present as the special guest, emphasised the importance of engaging the private sector. He expressed concern over the challenges in importing US cotton, citing higher shipping costs and the need for dedicated cotton warehouses and duty-free access to the US market.

Chairman of the Bangladesh Trade and Tariff Commission Moinul Khan, DCCI President Taskeen Ahmed and BUILD Chairperson Abul Kashem Khan also made speeches at the event.

The panel of discussants included Dr. M. Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh, Shams Mahmud, former President of DCCI, Rajib Haider, Director of the Bangladesh Textile Mills Association (BTMA), and Md. Mejbaul Haque, Executive Director of Bangladesh Bank.

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