Bangladesh plans to import more U.S. cotton to counter tariffs proposed by the Trump administration. This strategy aims to dissuade additional tariffs, while also addressing the country’s low domestic cotton production. The imminent graduation from the UN’s LDC status presents further challenges, particularly regarding EU trade benefits. U.S. farmers face difficulties amid rising costs and imposed tariffs from competing nations, although government support is being provided.
Bangladesh has formulated a strategic approach to counter potential tariffs from the Trump administration by increasing its imports of cotton from the United States. This plan, articulated by foreign affairs adviser Md. Touhid Hossain, emerges amidst the administration’s efforts to reduce the trade deficit, which has been a longstanding concern of President Trump. In 2024, U.S. imports from Bangladesh amounted to $8.4 billion, with $2.2 billion in exports to the nation, culminating in a trade deficit of $6.2 billion.
The current U.S. tariffs on Bangladeshi goods, particularly a 15.6 percent duty on apparel, already pose challenges. Hossain emphasized the necessity of this cotton import strategy to dissuade the U.S. from imposing additional tariffs. He noted, “By importing cotton from the U.S. and exporting garments made from it, we aim to create a situation where they hesitate to impose higher tariffs on us.”
Moreover, Hossain highlighted the need for Bangladesh to enhance its domestic cotton production. Although an essential cash crop, local production currently satisfies only about 3 percent of the national demand. Hossain anticipates the interim government will classify cotton as an agricultural product and initiate subsidies within three months, urging the National Board of Revenue to abolish the 4 percent advance income tax on domestic cotton.
Simultaneously, Vietnam is also attempting to mitigate potential tariffs linked to trade deficits, engaging with U.S. officials to discuss mutual economic benefits and the removal of trade barriers.
In addition to these tariff concerns, Bangladesh faces the imminent graduation from the United Nations’ Least Developed Countries (LDC) status next November, which could eliminate beneficial trade agreements with the European Union. This situation may result in apparel tariffs rising from zero to about 12 percent by 2029. Hossain expressed optimism, stating, “Our business community is waiting for this grace period to make necessary preparations, and I am confident they will be ready within that timeframe.”
How effective these plans will be in supporting U.S. cotton farmers remains uncertain, particularly in light of China’s additional 15 percent tariff on U.S. cotton products, retaliatory to increased duties on Chinese imports. Furthermore, U.S. farmers are grappling with rising costs and declining commodity prices, although the Department of Agriculture has committed up to $10 billion to assist agricultural producers under the Emergency Commodity Assistance Program, ensuring support for upland and extra-long staple cotton farmers with payments of $84.74 per acre.
In conclusion, Bangladesh is strategically increasing its U.S. cotton imports to mitigate potential tariffs from the Trump administration, while also aiming to bolster domestic production of cotton. As it navigates the complexities of international trade and prepares for an impending change in its LDC status, the country remains focused on optimizing its economic relations with the U.S. and the EU. The outcome of these efforts and their effects on U.S. cotton farmers will require close monitoring.
Original Source: sourcingjournal.com
