Kazi Zahidul Hasan :
Bangladesh will stand to benefit from the latest escalation of the US-China trade war, as heavy tariff on Chinese goods will give it an opportunity to have a bigger share in American market.
The Trump administration on Friday raised tariffs to 25 per cent from 10 per cent on US$200 billion worth of Chinese exports, including garment items, marking a sharp escalation in tension between the world’s two largest economies.
“Imposition of a higher tariff on Chinese exports has given an opportunity to a handful of countries to pick up their respective shares in the US market. Bangladesh is among them to get benefit from the spillover impact of the trade war,” Dr Khondaker Golam Moazzem, a Research Director at the Center for Policy Dialogue (CPD) told The New Nation on Sunday.
Bangladesh fetched $5.60 billion from exports to the US market in 2018, and apparel products alone contributed to US$5.40 billion of the total exports, according to a US official data.
“In fact, locally produced garments are most competitive in the US market followed by Vietnam. A 25 tariff on Chinese textiles and clothing products will push cost of sourcing by American buyers forcing them to shift work orders to Bangladesh,” said Khondaker Golam Moazzem.
“Bangladesh’s export to the US market is set to increase in the months to come cashing the additional flow of work orders from the US buyers.
“The escalated trade war has created huge opportunity for Bangladesh’s apparel industry. But, it may not be able to take full advantage of the situation due to lack of diversified products,” noted Khondaker Golam Moazzem.
Bangladesh’s apparel products are subjected to pay 15 per cent average duty while entering the American market.
“Our garment exports to the US market has been showing an upward trend over the last few months thanks to ongoing trade tariff war between the US and China and improved workplace safety,” Faisal Samad, Senior Vice-President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told The New Nation.
Bangladesh’s garment exports to the US have increased 10.10 per cent to $1.08 billion year-on-year in the first two months of this year.
“Local exporters are looking for increasing their export further to the US market taking advantage of a higher tariff on Chinese garment items,” said Faisal Samad adding that imposition of a higher tariff has made Chinese goods costly fuelling tensions to the US buyers over sustaining their investment and supply chain viability.”
To cope up with the situation, he said that a large number of American buyers are now looking for Bangladesh to reap benefit from its low cost apparel products. A lot of work orders are expected to shift from China that will ultimately benefit Bangladeshi garment sector.
When asked, Faisal Samad said, “No doubt, an opportunity has been created. But, we need to do more to have a bigger share in the US apparel market.
Bangladesh is the second largest apparel exporter after China and the south Asian nation earned over US$30.6 billion from exports of apparel in the last fiscal (2017-18).
“The trade war between USA and China has caused a shift to global trade creating an opportunity for some other low cost manufacturers like Bangladesh and Vietnam,” a Commerce Ministry official told The New Nation yesterday on condition of anonymity.
He said Bangladesh has already earned good name in apparel manufacturing thanks to cheap labour.
Major international fashion brands, such as H&M, The GAP, Levi’s and Zara, have manufacturing facilities in Bangladesh.
“Even before the trade war, Bangladesh’s share in the US garment exports was on the rise due to competitiveness of its products. High tariffs on imports from China make such products more expensive in the US forcing the American fashion companies to divert orders to Bangladesh,” said the Commerce Ministry official.
So, Bangladesh may end up as a beneficiary from the renewed escalation of US-China trade tensions.
