Bangladesh’s export outlook still sensitive despite tariff cut: BRAC EPL

The overall export outlook of Bangladesh remains sensitive to broader global tariff realignments despite the reciprocal tariff cut offering relief, BRAC EPL Stock Brokerage said in a special brief.

The brokerage house issued the brief after the US announced a 20 percent tariff on Bangladesh's exports to its market, 17 percentage points lower than the tariff initially announced by the Trump administration.

It significantly enhances the country's competitive position, BRAC EPL said.

The report said Bangladesh has secured parity with major garment exporters like Vietnam, Pakistan, Indonesia, and Sri Lanka in the US apparel market following the reduction.

Despite the cut, Bangladeshi exporters will still face a total duty burden of about 35 percent, the report said.

However, Bangladesh's well-developed RMG infrastructure gives the country greater bargaining power to negotiate cost pass-throughs with buyers, the brokerage house added.

India, for instance, currently faces a 25 percent reciprocal tariff. However, a possible free trade agreement or preferential access for India in the US market could pose long-term challenges to Bangladesh's RMG exports unless similar benefits are extended to Bangladesh.

While trans-shipment challenges for Bangladesh are yet to be clarified, the report noted that Vietnam has already faced such hurdles.

Before the third round of trade talks with the US, Bangladesh had pledged to increase imports from the US by $3 billion under a package deal. Of this, $1.5 billion will be through government-to-government arrangements.

Bangladesh imported $2.54 billion from the US in FY24 and $2.34 billion in FY23. The country now plans to double that figure to align with the tariff formula proposed by US President Donald Trump.

The interim government has already signed a five-year agreement to import 700,000 tonnes of wheat annually and approved an additional 220,000 tonnes.

Plans are also in place to increase LNG imports from the US and purchase 25 Boeing aircraft. Further discussions on additional high-value imports are ongoing.