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Us China Trade War

The US-China trade war has provided Bangladesh with both opportunities and challenges, particularly in its Ready-Made Garment (RMG) sector, which saw increased exports as US buyers sought alternatives to Chinese goods. However, Bangladesh faces uncertainties in global trade, rising raw material costs, and internal limitations that hinder its ability to fully capitalize on these opportunities. To enhance future gains, Bangladesh must improve infrastructure, streamline regulations, upgrade skills, and reduce dependency on Chinese raw materials.

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Sakib Rony
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42 views2 pages

Us China Trade War

The US-China trade war has provided Bangladesh with both opportunities and challenges, particularly in its Ready-Made Garment (RMG) sector, which saw increased exports as US buyers sought alternatives to Chinese goods. However, Bangladesh faces uncertainties in global trade, rising raw material costs, and internal limitations that hinder its ability to fully capitalize on these opportunities. To enhance future gains, Bangladesh must improve infrastructure, streamline regulations, upgrade skills, and reduce dependency on Chinese raw materials.

Uploaded by

Sakib Rony
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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The US-China trade war, which began in 2018 and involved increasing tariffs on hundreds of

billions of dollars in goods, has had significant global ripple effects—including for countries
like Bangladesh. While Bangladesh is not a direct party to the trade war, it has experienced both
opportunities and challenges as a result of the conflict.

Opportunities for Bangladesh

1. Export Diversification (Especially in RMG Sector):


o As the US imposed tariffs on Chinese textiles and apparel, US buyers began
seeking alternative sources.
o Bangladesh's Ready-Made Garment (RMG) sector benefitted, as it is the
second-largest RMG exporter in the world after China.
o Increased demand from US companies led to modest growth in RMG exports to
the US.
2. Investment Relocation:
o Some Chinese firms considered relocating production to countries like
Bangladesh to avoid US tariffs.
o This opened the door for foreign direct investment (FDI) in Bangladesh's
special economic zones.
3. Potential Role in Supply Chain Realignment:
o Global firms began to diversify supply chains to reduce dependence on China,
giving Bangladesh a chance to become a secondary hub for manufacturing.

Challenges for Bangladesh

1. Uncertainty in Global Trade:


o The trade war increased global economic uncertainty, which negatively impacted
investor confidence and trade flows.
o Bangladesh’s exports could be indirectly hit if the global economy slows down
due to US-China tensions.
2. Volatility in Raw Material Prices:
o Bangladesh relies on Chinese raw materials, especially for its RMG sector (e.g.,
fabric, yarn).
o Tariffs and supply disruptions increased input costs, affecting competitiveness.
3. Limited Capacity to Fully Capitalize:
o Despite opportunities, infrastructure and bureaucratic hurdles limited
Bangladesh’s ability to absorb diverted orders or new investments at scale.
o Labor skill gaps and port inefficiencies also reduced its advantage.
Trade Data Snapshot (Pre-COVID)

• US-Bangladesh trade volume grew during the early trade war years.
• RMG exports from Bangladesh to the US increased notably in 2019 and 2020.
• However, China remained a major raw material source, meaning Bangladesh’s
economy remained interlinked with China's.

Conclusion

The US-China trade war has created a mixed impact for Bangladesh. On the one hand, it opened
up new export opportunities and attracted potential investment. On the other, Bangladesh
faced external shocks and internal limitations that constrained its ability to fully benefit.

For future gains, Bangladesh needs to:

• Improve infrastructure
• Streamline regulations
• Upgrade skills
• Reduce dependency on China for raw materials

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