Bangladesh plans to import more U.S. cotton to counter potential tariffs from the Trump administration, which cited concerns over trade deficits. The country aims to enhance domestic cotton production while navigating the challenges posed by its upcoming graduation from the UN’s Least Developed Countries status, which may lead to increased tariffs on apparel imports.
Bangladesh is strategically importing more cotton from the United States to counteract potential tariffs proposed by the Trump administration. Foreign affairs adviser Md. Touhid Hossain stated that this initiative aims to mitigate the trade deficit, which saw the U.S. import $8.4 billion from Bangladesh while exporting $2.2 billion in 2024, creating a $6.2 billion deficit.
The Trump administration has been vocal about trade surpluses, describing them as evidence of the U.S. being unfairly treated. Currently, Bangladeshi products, especially apparel, are already subject to a 15.6 percent tariff. Hossain remarked that by importing U.S. cotton and exporting garments produced from it, Bangladesh hopes to create a hesitancy in the U.S. government towards imposing further tariffs.
Additionally, Hossain emphasized the need for Bangladesh to enhance its domestic cotton production, which currently meets only 3 percent of the country’s demand. He indicated that the interim government plans to recognize cotton as an agricultural commodity and will implement subsidies to boost production in the next few months while encouraging the National Board of Revenue to eliminate the 4 percent advance income tax on locally produced cotton.
Vietnam is also taking measures to prevent tariffs exacerbated by trade deficits. Vietnamese officials recently met with U.S. Trade Representative Jamieson Greer to explore ways to achieve equitable economic benefits and remove barriers to American business investments in Vietnam.
Moreover, Bangladesh faces an upcoming challenge as it is set to graduate from the United Nations’ Least Developed Countries category next November, which may lead to the loss of advantageous trade benefits with the European Union, potentially increasing tariffs on apparel imports from 0 to about 12 percent by 2029. Hossain remains optimistic, acknowledging that Bangladeshi businesses are preparing for this transition while still enjoying duty-free access for another three years.
The impact of Bangladesh’s cotton import strategy on U.S. cotton farmers remains uncertain, particularly given the ongoing trade tensions with China, which has imposed a 15 percent tariff on U.S. cotton. Farmers are currently navigating high equipment costs and declining commodity prices. The U.S. Department of Agriculture has announced a $10 billion aid package through the Emergency Commodity Assistance Program for agricultural producers for the 2024 crop year, offering payments to eligible cotton farmers.
In conclusion, Bangladesh is pursuing a proactive strategy to import cotton from the United States as a means to mitigate the potential for increased tariffs under the Trump administration. This strategic move aims to enhance domestic cotton production while maintaining favorable trade relations. As Bangladesh transitions away from its Least Developed Countries classification, the nation seeks to fortify its economic position against rising tariffs and trade barriers in both the U.S. and the European Union.
Original Source: sourcingjournal.com
