The escalating U.S.-China trade war is reshaping global markets, with currency fluctuations and shifting trade policies impacting economies worldwide. For Bangladesh, the situation presents both risks and opportunities, particularly in the garment industry, foreign investment, and currency stability.

Impact on Bangladesh’s Export Sector

As trade tensions push U.S. retailers to look beyond China, Bangladesh’s garment industry—responsible for nearly 80% of the country’s total exports—has emerged as a potential winner. A previous wave of tariffs led to a 6.46% increase in Bangladesh’s market share in the U.S., and the latest dispute may drive further gains. However, increased competition from Vietnam and India remains a challenge.

Foreign Investment Shifts

The trade dispute has encouraged Chinese manufacturers to seek alternative production hubs to avoid U.S. tariffs. Bangladesh, with its Export Processing Zones (EPZs) and lower labor costs, could attract new investments. However, to fully capitalize on this shift, the country must improve infrastructure, energy supply, and ease of doing business.

Currency Fluctuations and Economic Stability

The Bangladeshi taka has been under pressure, trading at 122 per U.S. dollar, with fluctuations impacting both exports and imports. A weaker taka may make Bangladeshi goods more competitive globally, but it also increases costs for imported raw materials, affecting local industries.

Strategic Considerations for Bangladesh

While Bangladesh stands to gain in trade and investment, challenges such as compliance with U.S. regulations, supply chain disruptions, and competition from other low-cost producers require strategic planning. Additionally, an influx of cheaper Chinese goods into Bangladesh, as China redirects exports to avoid U.S. tariffs, could strain local industries.