Since 2025, the contentious economic conflict between the United States and China has remained a salient consideration for both policy architects and researchers. Initiated during the first tenure of President Trump, the friction amplified through President Biden’s era and witnessed a further shift with the advent of Trump’s second term. Globally, the policy decisions have been met with critique; nonetheless, an in-depth review of the United States’ industrial development, economic growth, and the prevailing international trade disparities can provide a more wholesome understanding of the associated policies and their impacts.
Revitalizing industries, fostering innovation, promoting entrepreneurial initiatives, and thus creating openings for millions are essential tasks for developed economies. It is projected that the economic discord, dubbed the ‘Trade War’ under Trump’s second term, would persist into the foreseeable future, instinctively influencing global value chains (GVCs). This scenario could lead to worldwide economies reassessing their roles in GVCs and reorganizing their input-output structures based on their individual economic conditions.
Going forward, global production networks need to consider aspects such as economic proficiency, optimizing resource allocation, strategizing, while also taking into account both geo-economic and geopolitical realities. China has demonstrated its adaptability in maintaining its value chains since Trump’s first-term trade confrontations began. Unfortunately, not all economies are as equipped to adapt, as they may lack the necessary resources or flexibility.
Up until 2022, China was the leading supplier for US imports, accounting for approximately 21% of the total. However, since then, the Asian giant has been scaling down its exports to the US by expanding its trading horizons to other non-US and non-EU markets, especially in the Global South. Moreover, China’s bold striding in technology development, backed by its ‘Made in China 2025’ initiative and the Belt and Road vision, is a remarkable investment approach.
Countries like Bangladesh, with different capabilities and resources, can still learn from China’s strategic moves and accordingly recalibrate their trade approaches, incorporating both geographic and product diversification. Being an active participant in GVCs, it’s worth noting that Bangladesh is now the second-biggest exporter of Ready-Made Garments (RMG). However, the implementation of tariffs has heralded a state of unease among the stakeholders of the RMG industry and policymakers.
Even prior to the outbreak of the trade war, multiple challenges were stacking up against Bangladesh’s RMG industry. Among the issues were high dependence on low-cost and labor-intensive manufacturing, concentrated export markets, component and raw material sourcing restrictions, political unrest, shifting to the lower-middle-income status, and forfeiting several benefits associated with being a least-developing economy.
To address some of these issues, Bangladesh could diversify where it sources its intermediate components and raw materials instead of sole reliance on China and India. Approaching trading relationships with other countries like Pakistan, Central Asian Nations, Southeast Asian Countries, and also the United States can be viable alternatives. For instance, Central American nations turning American cotton into RMG products and exporting with duty- and quota-free preference to the US exemplify such a strategy.
Implementing similar strategies could mitigate Bangladesh’s trade deficit, thereby encouraging the US to review Bangladesh’s tariff levels. A genuine effort to level trade deficits and foster geo-economic and geo-political associations could influence the US to reconsider current duties and re-initiate the Generalized System of Preferences (GSP) facilities and fresh American investment and technology inflows.
The recently imposed US tariffs pose several challenges for the current administration and the Bangladeshi economy. The ongoing restructuring of the GVCs and market dynamics has led to a transition in the RMG sector from a low-cost, low-tech, labor-intensive business model to a higher-tech model with higher-value-added products.
Bangladesh has the potential to attract companies leaving Chinese and Vietnamese markets by enhancing workplace skills and productivity, investing in state-of-the-art technology, and fostering an encouraging business climate. Public policies should then focus on refining the manufacturing landscape to position Bangladesh as a preferred production hub for firms eyeing the global market.
The competitiveness of RMG products isn’t just dependent on labor costs but also on the physical and soft infrastructure in place. Improving the efficiency of infrastructural machinery through better operation of seaports, efficient shipping and customs administration, and reliable banking services can contribute to strengthening the RMG sector’s competitiveness.
For Bangladesh, exploring non-traditional markets that demand cost-efficient yet high-quality RMG products would be a lucrative strategy to diversify its export market. There should also be discussions with its two largest neighboring markets, India and China, to negotiate and remove non-tariff-related barriers (NTB), enabling a smoother passage for Bangladeshi goods.
In the face of Bangladesh losing several advantages it currently enjoys as a least developed economy, the interim government needs to request renegotiation or delay in tariff enforcement once it moves up to the lower-middle-income country category. Signing eco-friendly trade agreements with primary export markets to facilitate smoother trading activities can prove fruitful.
It’s essential to prioritize the upgrading of the value ladder for exportable goods, diversify product line, and ensure technology transfer through international joint ventures and other equity investments. The aversion to ‘change’ and clinging onto ‘status quo’ often leads to organizational stagnation.
Times of crisis and chaos often present opportunities for fresh thinking, the necessity for impactful reform measures, and a chance to reconstruct organizations. With the right reforms, investment in infrastructure and technology, and updated institutional policies, the current global trade friction could create several opportunities for Bangladesh’s manufacturing industry.
The post In the Midst of Global Trade War, How Will Bangladesh Survive? appeared first on Real News Now.
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