CPD Distinguished Fellow Mustafizur Rahman has expressed concerns over the potential negative impact of US President Donald Trump’s tariff policies on Bangladesh’s export opportunities, ruling out the possibility of creating new opportunities for the country’s exports under these circumstances.
Speaking at a media briefing on the CPD’s recommendations for the next fiscal year at the Centre for Policy Dialogue (CPD) office in Dhanmondi, Mustafizur raised concerns about the “limited and stagnant” export potential due to the tariff war initiated by Trump. He explained that this global trade conflict could harm global growth, particularly the US economy, leading to reduced demand for imports and consequently, limiting export opportunities for Bangladesh.
Mustafizur noted the impact of the 25% tariff imposed on Chinese-made garments when Trump first took office in 2016, which initially led to a decline in Bangladesh’s exports to the US market. Although exports to the US have since increased, he emphasized that it did not translate into any direct benefits for Bangladesh. He explained that 93% of Bangladesh’s ready-made garments are exported to the US, and Bangladesh is not competing with China in the categories of garments on which tariffs have been imposed. He also pointed out that Bangladesh’s garments, primarily cotton-based, differ from China’s synthetic fabric garments, which are affected by the tariffs.
Additionally, Mustafizur cautioned that the ongoing tariff war would have broader implications for global growth and negatively impact US demand, leading to a decrease in demand for imports, including those from Bangladesh.
CPD’s Budget Recommendations
Regarding the budget recommendations for fiscal year 2025-26, CPD has proposed raising the annual tax-free income threshold for individuals to Tk 400,000 from the current Tk 350,000, citing the current inflationary pressures and declining purchasing power. CPD Executive Director Fahmida Khatun presented these recommendations, including increasing the maximum tax rate to 30% for higher-income individuals.
Fahmida also highlighted the ongoing economic challenges faced by the interim government, such as high inflation, stagnation in revenue collection, and a liquidity crisis in the banking sector. She pointed out that achieving revenue growth will be difficult, and the fiscal deficit could reach Tk 1.5 trillion by the end of the fiscal year.
On inflation, Fahmida expressed doubt that the Bangladesh Bank’s target of reducing it to 7-8% by June 2025 would be achievable, given the ongoing global tariff war and the inflationary trends. She stressed the need for effective macroeconomic management, including controlling inflation, stabilizing foreign exchange reserves, and enhancing the revenue system’s capacity.
In the CPD’s budget proposals, Fahmida emphasized the need to reduce tariff rates on 60 products to maintain trade balance and mitigate the impact of LDC graduation. CPD also recommended reforms in the National Board of Revenue (NBR), including modernization, digitization, and the creation of a harmonized tax policy to improve tax collection efficiency.
