In a world stitched together by trade and diplomacy, a sudden pull of one thread can unravel entire economies. That is precisely the risk posed to Bangladesh today, as the U.S. President Donald Trump reintroduces a wave of reciprocal tariffs that threatens to upend Bangladesh’s ready-made garment (RMG) industry. With a stunning hike in tariffs on Bangladeshi goods, particularly garments, Trump’s economic manoeuvre has launched a ripple effect that may reshape the global garment trade and stress-test Bangladesh’s economic resilience. While political optics and nationalist sentiment fuel Trump’s tariff policy, the consequences are proving dangerous for developing economies that depend on the U.S. export market. Bangladesh, the second-largest RMG exporter in the world and the fifth-largest market for U.S. cotton, finds itself at the crossroads of trade and geopolitics.

Before this new policy, Bangladesh’s apparel exports to the U.S. — valued at $7.34 billion in 2023 — faced an average tariff of 15%. The new reciprocal rate of 37% more than doubles the barrier. In an industry where profit margins are razor-thin and consumer price sensitivity is high, this increment is not just a number — it is a potential deal-breaker. American brands and buyers may seek cheaper sourcing alternatives, not necessarily because they offer better quality, but simply to maintain profit margins. And this is not theoretical. Empirical studies show that a 1% increase in tariffs can reduce exports by 0.5–1.2%.

At first glance, Bangladesh appears insulated. Vietnam (46%), China (34%) and Cambodia (47%) face even steeper tariff hikes. But context matters. Vietnam and China primarily export high-end apparel, while Bangladesh’s strength lies in low- to medium-priced garments — typically in the $20–$60 range. For such budget-conscious consumer goods, a small change in price can cause a massive shift in buying behaviour. Moreover, Bangladesh’s exports are highly concentrated — 84% of exports to the U.S. are from the RMG sector. This leaves little room for manoeuvre.

Bangladesh’s RMG industry employs around 4.3 million workers — 60% of them women from rural and underprivileged backgrounds. A drop in export orders due to tariffs could lead to large-scale layoffs, pushing these workers back into poverty and undoing decades of social progress. Job losses will not be confined to factory floors. From logistics to banking, from ports to packaging — an entire network revolves around the RMG sector. The IMF has already warned of a fragile global economic outlook and Bangladesh, amidst its own macroeconomic challenges, can ill afford another external shock.

However, on the other part of the coin, Trump’s protectionist policy could backfire on American consumers. Bangladesh is a key node in the U.S. fast-fashion supply chain. By making imports more expensive, the tariffs will likely raise retail prices in the U.S., fuelling inflation and dampening consumer demand. This inflationary spiral could create a broader slowdown in the U.S. economy — which, in turn, would shrink demand for foreign goods, including those from Bangladesh. It is a self-reinforcing cycle: tariffs lead to inflation, inflation erodes purchasing power and reduced consumption hurts exporters.

The IMF and World Bank have consistently warned that trade wars seldom produce long-term winners. Instead, they scatter unintended consequences across the globe, especially in emerging markets.

Yet, all is not lost. Bangladesh holds some important leverage. It is the fifth-largest importer of U.S. cotton — a critical input in garment manufacturing. It also imports American soybeans and scrap metal, both of which enter Bangladesh at relatively low tariffs. This interdependence should not be underestimated. This could be Bangladesh’s bargaining chip: offer to reduce current tariffs on American products — currently averaging 74% — in exchange for restoring previous duty levels. Exporters suggest dropping this to 30%, which would halve the reciprocal U.S. tariff to 15%, as per the Trump administration’s own framework. Such a negotiated reset could restore equilibrium and prevent trade relations from souring further.

Adding fuel to the fire, Bangladesh is set to graduate from its Least Developed Country (LDC) status by 2026. This will end its preferential access to the European Union, which currently absorbs 54% of its exports. So while the U.S. tariffs are a pressing concern, they are merely a harbinger of structural challenges to come. The dual threat of losing market access in both the U.S. and EU could create a seismic shift in Bangladesh’s trade landscape. So, policymakers must begin urgent negotiations with Brussels while simultaneously building regional and multilateral alliances.

Trade diplomacy is no longer optional — it is existential. Until a shift in U.S. leadership or trade philosophy occurs, Bangladesh must navigate the present with strategic foresight. Diplomacy remains the sharpest tool in Bangladesh’s arsenal. There is no alternative to negotiation. From Dhaka to Washington D.C., from GSP talks to tariff recalibrations — Bangladesh must stay engaged, proactive and constructive.

Bangladesh’s RMG sector is not merely a business; it is a national backbone — stitching together livelihoods, foreign reserves, women’s empowerment and macroeconomic stability. Trump’s tariff gambit, while rooted in American electoral calculations, threatens to unravel this tapestry. To weather this storm, Bangladesh must act on multiple fronts — initiate swift trade negotiations with the U.S., reform internal tariff structures, diversify export markets and invest in productivity gains. In the global marketplace, resilience belongs to the nimble. The story of Bangladesh’s rise as a garment superpower was never written in comfort — it was forged in adversity. Today, as the U.S. redraws its trade lines, Bangladesh must once again reinvent its strategy.

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The writer is a physician & international award-winning youth leader of Bangladesh. He can be reached at

[email protected]