Bangladesh readymade garment sector may see boost to its exports to the US market as the US president Donald Trump warned on Friday he was ready to slap tariffs on virtually all Chinese imports into the United States, according to a global investment expert.
Trump threatened duties on another $267 billion of Chinese goods on top of $200 billion in imports primed for levies in coming days, reports Reuters.
If the US president goes with his plan, Chinese apparel exports will also face tariffs in US market, where Bangladesh is one of the leading players.
An article on portfolio strategy posted on Seeking Alpha, a US-based crowd-sourced content service provider for financial markets, on August 14 highlighted that Bangladesh and Vietnam would be beneficial most if US imposes any tariff on apparel imports from China.
According to investment guru Mark Mobius, one of the ‘grandfathers’ of emerging markets, ‘those countries who are going to be exporting to the US instead of China – like Bangladesh, Turkey, Vietnam. They are all big producers of garments and shoes and consumer goods.’
Mobius, the emerging markets fund manager who ran Franklin Templeton Investments’ emerging markets team from 1987 to 2016, recently told CNBC , ‘You see, with the US and China slapping tariffs on each other’s products, the prices of those products will go up. For example, garments from China that are exported to the US will quickly become more expensive. So US companies will look for other, cheaper sources of garment manufacturing… like in Bangladesh and Vietnam.
Increasing their exports to the US would just be the latest boon for Bangladesh and Vietnam, he said.
China exports apparel products worth around $11.40 billion to US in a year while Bangladesh exports around $5.5 billion and Vietnam around $11.50 billion.
Ahsan H Mansur, executive director of Policy Research Institute, a local think-tank, told New Age on Saturday that Bangladesh RMG sector might gain as an immediate effect if Trump slapped duties on Chinese apparel products.
‘Temporarily, Bangladesh garment export may US rise and some of the Chinese investment could come to Bangladesh, but in the long run, it is not sustainable. Any trade war is not good for global economy,’ he said.
The latest Trump move to slap duties on all Chinese imports would sharply escalate Trump’s trade war with Beijing over his demands for major changes in economic, trade and technology policy, reports Reuters.
China has threatened retaliation, which could include action against US companies operating there.
Hours after a public comment period closed on his $200 billion China tariff list, Trump told reporters aboard Air Force One that he was ‘being strong on China because I have to be.’
‘The $200 billion we are talking about could take place very soon depending on what happens with them. To a certain extent it’s going to be up to China,’ Trump said. ‘And I hate to say this, but behind that is another $267 billion ready to go on short notice if I want. That totally changes the equation.’
Stock prices slipped after his comments, with the S&P 500 off 0.2 per cent, while China’s off-shore trade yuan currency fell against the dollar.
There was no immediate reaction to Trump’s comments from the Chinese government, and the threat of more tariffs had not been reported by mainstream state-owned Chinese media as of Saturday evening.
Trump has already imposed 25 per cent tariffs on $50 billion worth of Chinese goods, mostly industrial machinery and intermediate electronics parts, including semiconductors.
The $200 billion list, which includes some consumer products such as cameras and recording devices, luggage, handbags, tires and vacuum cleaners, would be subject to tariffs of 10 per cent to 25 per cent.
Cell phones, the biggest US import from China, have so far been spared, but would be engulfed if Trump activates the $267 billion tariff list.
Trump’s threatened tariffs, now totalling $517 billion in Chinese goods, would exceed the $505 billion in goods imported from China last year. But 2018 imports from China through July were up nearly 9 per cent over the same period of 2017, according to US Census Bureau data.
Earlier on Friday, White House economic adviser Larry Kudlow told Bloomberg Television the administration would evaluate public comments before making decisions on the $200 billion tariff list.
The US Trade Representative’s office received nearly 6,000 comments and held seven days of public hearings on the proposed levies.
Most comments were from companies seeking to remove products from the tariff list, arguing there were few, if any alternative sources and the duties would cause financial hardship. Comparatively few applauded the tariffs.
Major technology company Apple Inc said a ‘wide range’ of its products would be hit by the tariffs, but not its iPhone. It said in a late submission that its AirPods headphones, some of Apple’s Beats headphones, and its new HomePod smart speaker would face levies, causing its shares to slip in late trading.
‘Our concern with these tariffs is that the US will be hardest hit, and that will result in lower US growth and competitiveness and higher prices for US consumers,’ Apple said in the letter.
Retailers had successfully kept high-profile consumer electronics such as cell phones and television sets off of previous tariff lists. But David French, top lobbyist for the National Retail Federation, whose members include Amazon.com , BJ’s Wholesale Club and Macy’s, said nearly every consumer good could be affected if Trump follows through on all threatened tariffs.
‘The Chinese aren’t paying these tariffs, American families are going to pay these tariffs. These are taxes and they’re going to find their way into the pocket book of folks around the country,’ French said.
Kudlow, who heads the National Economic Council, told CNBC the administration was still talking with China about trade issues but so far China had not met US requests.
The United States has demanded that China better protect American intellectual property, cut its US trade surplus, allow US companies greater access to its markets and roll back its high-technology industrial subsidy programs.
‘We are still talking with China on a number of issues ... Those talks will continue to go on. We want lower (trade) barriers across the board,’ Kudlow said.
Specifically, Kudlow said, the United States was seeking ‘zero tariffs, zero non-tariff barriers, zero subsidies, stop the IP theft, stop the technology transfer, allow Americans to own their own companies.’
‘Those have been our asks for many months and so far those asks have not been satisfied,’ he said. ‘However, hope springs eternal.’