By Sadik Sagar, Dhaka, February 3, 2026

Bangladesh is facing renewed economic and trade challenges as former US President Donald Trump’s tariff reduction policy—lowering tariffs to 18 percent on selected imports—and the deepening trade partnership between India and the European Union (EU) reshape the global trade landscape. Together, these developments are raising concerns among policymakers and exporters in Bangladesh about potential losses in competitiveness, market share, and foreign investment.

Trump’s move to reduce tariffs to 18 percent on imports from key trading partners, including India and the EU, is expected to stimulate trade flows among major economies. For India, the policy could translate into improved access to the US market, strengthening its export capacity in sectors such as textiles, pharmaceuticals, leather goods, and engineering products. At the same time, the India–EU trade deal is set to provide Indian exporters with preferential access to European markets through reduced tariffs, streamlined regulations, and stronger supply chain cooperation.

For Bangladesh, whose economy heavily depends on exports to the EU and the US—particularly ready-made garments (RMG)—these shifts could intensify competition. India’s improved tariff advantages in both the US and EU markets may allow Indian products to enter these markets at lower costs, putting pressure on Bangladeshi exporters who already face rising production costs and shrinking margins.

The timing of these developments is particularly critical for Bangladesh as it prepares for graduation from the Least Developed Country (LDC) category. Currently, Bangladesh enjoys duty-free and quota-free access to the EU under the Everything But Arms (EBA) scheme. After LDC graduation, the country will gradually lose these trade privileges unless it secures alternative arrangements such as a Free Trade Agreement (FTA) or enhanced preferential schemes. In contrast, India’s growing network of trade agreements could widen the competitive gap.

Economists also warn that global investors may increasingly favour India due to its expanded market access and stronger trade linkages with major economies. This could divert foreign direct investment (FDI) away from Bangladesh unless the country accelerates reforms, improves infrastructure, and enhances its business environment.

However, experts believe that the evolving trade scenario also offers opportunities for Bangladesh to rethink its trade strategy. Diversifying exports beyond garments, moving towards higher value-added products, and strengthening bilateral and regional trade negotiations are seen as crucial steps. Enhancing productivity, upgrading technology, and ensuring compliance with international labour and environmental standards will also be essential to sustain export growth.

Government officials say Bangladesh is closely analysing the implications of Trump’s tariff policy and the India–EU trade deal. Efforts are underway to formulate policy responses aimed at safeguarding export competitiveness and attracting investment.

The combined impact of Trump’s tariff reduction and the India–EU trade agreement highlights a fundamental reality: global trade is becoming more competitive and interconnected. For Bangladesh, these developments serve as both a warning and an opportunity to accelerate economic reforms and secure strategic trade partnerships to protect its position in key global markets.