It is not clear as to why the US has imposed the tariff on Bangladeshi products. According to their calculations, there has been a 74 per cent tariff on the products Bangladesh imports from the US. Based on that the US has decided to impose a 37 per cent tariff on Bangladeshi goods.
Apart from the duty on imported products, the US has taken into consideration some other factors while imposing the tariff. For example, currency exchange rate, non-tariff barriers, trade policies and so on. The tariff on the products Bangladesh imports from the US is actually very low. The thing is, Bangladesh imports the most three types of goods from the US. Those are - scrap iron, petroleum and cotton. Of those products, there is no tariff on import of scrap iron and cotton which are used as raw materials. The cotton is used to prepare readymade garments that we export to the US. In fact, readymade garments accounted for 90 per cent of the export volume to the country.
Bangladesh is the 5th largest buyer of cotton from the US. In this case, the US itself has a rule - the country offers tariff rebate to those who import raw materials from them and export products made of those raw materials. But this rule was followed for Bangladesh while imposing reciprocal tariff on the country.
In this context, we have scope for discussions with the US.
I think we should highlight those issues using a platform like Trade and Investment Cooperation Forum Agreement (TICFA). Firstly, we have to ask the US what was the basis of their calculation of the 74 per cent tariff imposed by Bangladesh on their goods. This is because, according to our calculation, the amount is far smaller than that. There is some kind of manipulation in their calculation of the currency exchange rate. It is true that once the value of taka used to be set high artificially but this has been made consistent with the exchange market gradually in the last three years. As a result, our exchange rate is closer to the market rate now.
We have to raise these points in discussions.
Meanwhile, a trade war could break out globally if major powers like China, the European Union take counter measures against the tariff the US imposed. Prices of goods and services in the country could go up because of increased tariffs by various countries which will hit the buying capacity of the US citizens. As a result, the volume of buying also would come down. At the same time, the inflation rate would go up, consequently, the growth rate of the US economy would decrease; there could even be recession.
If this happens, this will affect the economies of other countries too. That means, there will be different types of impacts of this tariff hike.
There is no mention about how long this tariff rate will remain effective. But the doors for discussion are open. If any country decreases the tariff rate, the US also will do the same.
Bangladesh should raise its points using the TICFA platform and start discussion on reducing tariffs.