In early 2025, the White House imposed steep tariff hikes on a number of One of the most affected is Bangladesh — a country that has the world’s fastest-growing export economy based on garments and generic pharmaceuticals. The tariffs on Bangladeshi goods may soar to 37 percent — one of the highest hikes in the world. The impact will be catastrophic.
The impact on Bangladesh’s key export sectors.
Bangladesh exports approximately USD 8.4 billion worth of garments to the United States every year and is one of the leading global suppliers to the US fashion market. The country is also a major exporter of large quantities of inexpensive, generic drugs. Now, both sectors —which employ millions combined — are on the line.
The U.S. had previously levied tariffs of 15 to 32 percent on Bangladeshi apparel, depending on the fabric. A 37 percent drop is a huge blow. On its part, Washington maintains that the step is warranted, what it calls “effective tariffs of 74 percent” on American goods embarking to Bangladesh, a term that encompasses both taxes and regulatory obstructions.
Trump has framed it as an overdue correction, announcing the move as part of his “Liberation Day” economic initiative. Respect — for the American trade, he declares — is by way of balance, even when that balance happens at the expense of impoverished economies.
“But the new tariffs could force factories to close and workers to be laid off en masse,” industry leaders in Dhaka said. Overseas clothing buyers — afraid of greater expenses, at least for the time being — are already moving orders out to India, Pakistan, and Latin America, where tariffs are lower.
Top 3 Reasons Why Bangladesh Is Unique
While other countries in the region, such as India, Pakistan, and Sri Lanka, are affected, Bangladesh’s dependence on export makes it uniquely vulnerable. India’s domestic market and manufacturing base are bigger. The people of Bangladesh, in contrast, are tightly bound up with a small number of flourishing export industries and completely reliant upon American buyers.
For a country where more than four million people work in the garment industry, and many of those workers are women, however, the stakes are not only economic but also existential.
A politically charged emotional context.
The timing of the policy reversal is noteworthy. Sheikh Hasina, a former prime minister, resigned in 2024 amid widespread protests and scrutiny from around the world. Notably, a Nobel Laureate, Muhammad Yunus, is now leading an interim government with the twin aims of restoring not just political credibility but also his country’s international relationships.
Some had hoped the political change would help thaw relations with Washington. But the tariffs suggest that the U.S. administration values, or stakes, transactional trade interests over realignment with the broader regional political landscape, or diplomatic goodwill.
The Yunus government has started negotiations with the Office of the U.S. Trade Representative and is reviewing Bangladesh’s own tariffs on American imports in a bid to resolve the standoff. But changes in tariff schedules and changes in trade policy are slow and complicated, and the pain in the field is already being felt.
Shifts in supply chains and geopolitics
The repercussions of the U.S. tariffs are significant. U.S. retailers and suppliers are looking for other sourcing partners, a trend that was already on the rise. India, with its stronger infrastructure, would probably be helped. Pakistanis, too, can see some short-term gain despite coming out of their own economic malaise.
At the same time, other Latin American nations such as Mexico, Nicaragua, and Colombia—which currently have preferential access to trade with the U.S.—are emerging as long-term, increasingly viable options. Shifting to nearshoring is in keeping with a broader American goal of pulling supply chains closer to home, lessening reliance on far-flung and politically turbulent areas.
How is Bangladesh recalibrating?
Bangladesh’s government is in a panic over how it can diversify exports. Negotiations with the EU, Canada, and Japan are being expedited. At home, the tax collector, National Board of Revenue, is mulling cuts of its own, reducing imports from the United States as a gesture of good faith.
But these sorts of efforts take time, and the immediate shock has already cast its ripples. Factory owners are threatening to shut down factories. Laborers—and many of them live paycheck to paycheck—are also facing increasing insecurity. The economic shock will radiate beyond the large urban centers to rural areas that depend on remittance income from garment sector workers.
A game changer for international trade?
Trump’s policy, packaged as a patriotic correction to a rigged global trading regime, propels larger questions about the future of globalization. Once hailed as engines of low-cost manufacturing, developing countries are facing increasing pressure—not only to fulfill environmental and labor demands but now to prevent trade barriers imposed by big importers.
This could be a defining moment for Bangladesh. A more radical reimagining of the economy could create new opportunities but will also be disruptive and uncertain.
A course correction or a course collision?
As South Asia deals with this latest trade shock, it’s growing clearer that it is being remade by American trade nationalism. For Bangladesh, this isn’t merely a matter of policy — it is a question of national survival.
Whether those crises will turn into a pivot point for the country will depend on how fast and effectively it responds diplomatically and economically.
