What US trade probes mean for Bangladesh

The United States’ recent decision to launch two separate investigations under Section 301 of the Trade Act of 1974—one concerning global industrial overcapacity and another focusing on forced labour—signals a sharper turn in Washington’s trade policy.

For Bangladesh, these moves are more than distant geopolitical gestures. They strike close to the heart of the country’s export model and raise uncomfortable questions about how sustainable its current trade strategy will be in a more protectionist global environment.

The first investigation, centred on alleged excess manufacturing capacity, appears to be driven by the Trump administration’s broader effort to revive American industrial production. Bangladesh’s inclusion in that list is revealing.

The country’s bilateral trade surplus with the United States, estimated at over $6 billion, is overwhelmingly driven by textile and apparel exports. For decades, Bangladesh’s ready-made garment sector has thrived on its ability to produce large volumes at competitive prices.

Yet the logic of the US investigation suggests that this very success may now be framed as a problem. When Washington speaks of “excess capacity” abroad harming American manufacturing, it essentially questions whether export-oriented economies like Bangladesh have built industrial strength in ways that distort competition.

From Bangladesh’s perspective, this framing is debatable. Much of the country’s export growth has been rooted not in heavy industrial subsidies but in labour-intensive production, private entrepreneurship, and participation in global value chains. Export incentives do exist, and they are common among developing economies seeking to diversify production. But they are hardly unique to Bangladesh.

The risk, however, lies less in the validity of the accusation and more in the political momentum behind it. If the investigation ultimately leads to punitive tariffs or other trade restrictions, Bangladesh’s largest export market could become less predictable.

That possibility alone introduces uncertainty into a sector that employs millions and remains central to the country’s industrial transformation.

The forced labour investigation introduces a different but equally sensitive dimension. Bangladesh’s garment industry has already undergone significant reforms since the Rana Plaza tragedy in 2013. Workplace safety standards have improved, monitoring mechanisms have strengthened, and global buyers have imposed stricter compliance requirements.

Still, labour governance remains uneven. Informality persists in segments of supply chains, and labour rights enforcement often struggles with institutional capacity constraints. The US investigation therefore touches on a broader debate about labour standards in global production networks.

From a policy standpoint, Bangladesh faces a delicate balancing act. On the one hand, it must resist narratives that simplistically portray its development model as exploitative or unfair. On the other hand, the investigations highlight the urgency of strengthening domestic institutions. Labour inspections, supply-chain transparency, and compliance monitoring must continue to improve—not only to satisfy foreign scrutiny but also to protect workers and sustain long-term competitiveness.

More broadly, these developments illustrate a deeper shift in global trade politics. The era when export success alone guaranteed market access is fading. Trade is increasingly intertwined with geopolitical rivalry, industrial policy, and social standards. For Bangladesh, which is preparing to graduate from least developed country status, this changing landscape demands a strategic response. Diversifying export markets, moving up the value chain, and building stronger regulatory institutions will become essential.

In that sense, the US investigations should be viewed not merely as threats but also as warning signals. They remind Bangladesh that the next phase of its development cannot rely solely on cost advantages and scale. Competitiveness in the future will depend increasingly on credibility, standards, and institutional strength.

The writer is a professor of economics at the University of Dhaka and executive director of Sanem