Tariff talks alone will not fix the economy

The pricing issues caused by new trade restrictions are raising growing concern across Bangladesh's export sector. And this concern comes not from problems within the country, but from sudden changes in the international trade system.

The recent decision by the United States to impose a 35 percent tariff on Bangladeshi goods marks a serious challenge. Even though this is slightly lower than the earlier announced 37 percent, it remains significantly higher than the 20 percent that Bangladesh had hoped for. In effect, the tariff puts enormous pressure on our exports, particularly the readymade garments (RMG) industry, which depends on keeping prices low and competitive.

For years, Bangladesh has held a firm position in global supply chains by producing good-quality products at affordable prices. But now, this new tariff is testing the resilience of that model. The RMG sector has responded swiftly, with local suppliers, factories and international buyers trying to share the additional cost. However, such solutions are not sustainable. No matter how creative the cost-sharing model may be, it cannot fully protect us from the erosion of our price advantage.

This moment calls for a deeper, more honest review of our export strategy. Much attention is currently focused on ongoing discussions. Some recent signals from the US government suggest that the August 1 deadline may be flexible. While this offers a narrow window of hope, Bangladesh cannot rely solely on foreign talks without making improvements at home.

At the core lies a long-standing issue. Bangladesh depends too heavily on a limited number of products and a handful of international markets. Although this risk has been acknowledged for years, meaningful diversification has been slow. It is true that countries like Vietnam have secured lower tariffs, but they too are now facing restrictions aimed at preventing trade route misuse, especially by China. This underlines just how unpredictable global markets have become.

Several areas demand urgent attention. Infrastructure issues such as port delays, power shortages and inefficient transport continue to undermine export performance. The tax and customs environment remains far from business-friendly. What were once seen as internal issues now directly affect our global competitiveness.

On top of that, Bangladesh is on the cusp of graduating from its least developed country (LDC) status. This transition means that the trade benefits we have enjoyed for decades will gradually be withdrawn. In a world becoming increasingly protectionist and focused on national interests, this shift will bring fresh challenges.

There is no question that Bangladesh needs a clear, long-term strategy. We must focus on strengthening our foundations, not just reacting to individual crises. We need to expand into new markets, including Africa, Latin America and the Middle East, rather than relying on a few Western countries. Trade agreements must be pursued proactively to show that Bangladesh is ready to take a fair and equal place in the global economy.

We must also invest in skill development and the production of higher-value goods. Bangladesh cannot continue to rely solely on low-cost manufacturing if it wants to remain relevant in global trade. In addition, stronger collaboration between government, the private sector, foreign trade missions and influential global stakeholders is essential for better preparation.

This new tariff should not be viewed as an isolated problem. It is a signal. It tells us that the time has come to move beyond a basic low-cost approach towards a smarter and more balanced export model.

The path forward lies not in quick fixes or short-term talks, but in aligning smart foreign policy with real domestic reform. Tariffs will come and go. What matters is whether Bangladesh has the strength and adaptability to manage change and emerge stronger through better negotiation.

The writer is an economic analyst and chairman at Financial Excellence Ltd