Can Trump policies offer business opportunities for Bangladesh?  Economists, exporters say yes

Highlights:

• Trump is widely known for his business-friendly approach
• Global conflicts may calm down
• May boost favourable business environment
• Stricter stance on China could redirect export orders to Bangladesh
• US-China conflict may pose risk too

US President-elect Donald Trump's policies could create business opportunities for Bangladesh as his stricter stance on China could redirect export orders to Bangladesh, according to economists and exporters.

Apparel exporters believe the US trade policy towards China – one of Bangladesh's main competitors in the global apparel market – will be pivotal for their industry in the coming years. Since the US is the largest single export destination for Bangladeshi apparel, this policy shift is particularly significant for Bangladesh, the world's second-largest apparel producer after China.

RMG exporters say Republican Trump's plan to impose higher tariffs on imports from China could boost Bangladesh's garment exports.
Trump, widely known for his business-friendly approach, has also expressed a reluctance to engage in international conflicts, which could lead to greater global stability and a favourable business environment.

Economists and businesses, speaking to The Business Standard, have expressed their hope that under his administration, US military involvement in global conflicts may decrease, potentially fostering global stability after several years of disruptions due to various conflicts, which may create a business-friendly environment across the globe.

Envoy Textiles founder Kutubuddin Ahmed said, "The US President-elect Donald Trump is largely known as a business-friendly person, but his stricter stance on China may prompt buyers to shift orders from China to other countries. As the second-largest apparel exporter, Bangladesh could seize this opportunity. During Trump's previous tenure, some RMG orders had already started shifting to Bangladesh."
Kutubuddin noted that Trump has previously avoided military conflicts despite various pressures.

DBL Group Managing Director MA Jabbar echoed the view, but said, "We have to see to our communication with the US government."

He added, "The interim government should focus on improving bilateral trade. It depends on the capacity of our negotiations."
Kutubuddin also said Trump seems to be harsher than others but he is very focused on business, rather than involving any military conflict. 

"We observed that the US people consider the right person as their leader to lead the nation, considering all aspects and people are very confident about him. Hopefully, he will play his role very smartly," said Jabbar, who is currently staying in the USA.

Policy Exchange Bangladesh Chairman M Masrur Reaz said Trump's victory paves in both opportunities and risks for countries like Bangladesh.

"For Bangladesh, opportunities lie more in the short to medium term, as Trump's stance on imports from China could lead to increased demand for Bangladeshi goods," he explained. "If Trump imposes high tariffs on Chinese imports, US importers may seek alternative sources, with Bangladesh offering a competitive advantage, particularly in the RMG sector."

Reaz highlighted another opportunity: an influx of foreign direct investment (FDI) from Chinese manufacturers seeking alternative production bases to avoid US tariffs on Chinese goods.

"And that would mean that they would like to set up manufacturing facilities in proven manufacturing hubs such as Bangladesh in order to produce and export from there under the label of those countries," he said.

"So, if Bangladesh can rightly target and strategise, it can bring in a good amount of Chinese FDI in the RMG sector, but also in some other alternative promising sectors such as light manufacturing, machinery, agro-processing, plastics such as toys. In the long run, however, there is a risk because Donald Trump, his position towards globalisation, which is the main driver of global value chain and global trade, is also very negative.

"So, if he rolls out very concrete measures which are against globalisation or defeats the globalisation spirit, it will ultimately hurt everybody. All global partners who now benefit from trade and global trade might even go down, which will ultimately hurt all the countries and global value chain participants such as Bangladesh, Vietnam and so on."

However, Research and Policy Integration for Development Chairman Mohammad Abdur Razzaque said, "President Trump's policies could offer a blend of opportunities and challenges for Bangladesh.  His more stringent stance on China could lead to a diversion of export orders from China to other suppliers, potentially benefiting countries like Bangladesh. Furthermore, Trump's intent to reduce US engagement in military conflicts may contribute positively to global stability."  

An escalation into a full-scale trade war between the US and China would likely inflict damage on the global economy, Razzaque said. During Trump's previous term, his administration's trade policies contributed to a slowdown in global trade, with Bangladesh witnessing five months of negative export growth from July 2019 to January 2020, he added.

Razzaque further said, "Renewed protectionist measures by the Trump administration could signal a broader resurgence of restrictive trade policies worldwide posing significant implications for countries like Bangladesh. This challenge coincides with Bangladesh's upcoming graduation from Least Developed Country status, potentially intensifying competitive pressures on its exports."

Overall, these dynamics present a complex landscape of both opportunities and potential setbacks for Bangladesh, he added.

Sharif Zahir, managing director of Ananta Apparels, said Trump's return to power could significantly impact Bangladeshi industries. "Trump's proposal to impose a 60% duty on imports from China, a nation exporting approximately $200 billion worth of goods to the US, presents a major shift in global trade dynamics."

Mentioning that Trump has also proposed to impose a 10% duty on imports from all countries Zahir said, "If implemented, this policy could help Bangladesh compete with other non-tariff countries such as Jordan, Egypt, and Israel. Currently, Bangladeshi apparel exporters pay about 16% duty on cotton garments and nearly 30% on synthetic garments when exporting to the US."

He further explained, "Bangladesh denim exporters are paying 16% duty on export to the US. If the US imposes a 60% duty on China, most US retailers may quickly shift to countries like Bangladesh, creating significant opportunities for our exporters."

Zahir, however, cautioned that capitalising on these opportunities would require strategic preparation.

Considering Bangladesh's geopolitical position, Sharif suggested that this could be an opportune time to strengthen relations with the US.

He noted that interim government leader Muhammad Yunus's positive reputation in the country could facilitate the enhancement of bilateral ties.