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In recent months, the global trade landscape has undergone significant upheaval driven by the United States’ aggressive tariff policies. These tariffs aim to reduce the U.S. trade deficit, particularly with China and other large trading partners, and have triggered an adverse ripple effect across international markets, affecting industries far and wide. Among the sectors most affected is the plastics industry, an emerging sector of Bangladesh’s export economy, as it looks to diversify its export basket.
Since 2018, the U.S. has imposed broad tariffs on all imports, including plastics and petrochemicals to bolster domestic production and reduce import reliance. These policies apply globally to all trading partners, including to Bangladesh.1
What began as a 10% standard tariff in 2018 has, by now, climbed even higher for most countries, even for Bangladesh. Chinese plastics and chemicals once faced up to 145% in tariffs, though this has been reduced under a 90-day truce to about 30%.
In a reciprocal move, China has also lowered its retaliatory tariffs on U.S. goods. Following negotiations in May 2025, both nations agreed to reduce their respective tariffs to 10% for a 90-day period, down from previous rates as high as 125% on Chinese imports and 34% on U.S. goods. This adjustment aims to stabilize trade relations and mitigate economic disruptions for these trade giants.2
Bangladesh, initially assigned 37%, successfully negotiated it down to 20%.3 Countries like Vietnam, Taiwan and Japan faced tariffs ranging from 10% to 50%, depending on the product class.4
The overarching effect of such tariffs has been one of heightened uncertainties, with disruptions mainly being twofold: supply chains for raw materials have become more expensive and unreliable, while the volatile tariff environment makes costing and pricing for export contracts extremely risky.
The Bangladesh plastic industry mainly encompasses manufacturers of packaging, houseware, automotive parts, construction materials, and industrial components and textile materials, operating within an interconnected global supply chain that has been increasingly affected by these tariffs.
With the US and EU being one of its key export markets, the imposition of higher tariffs on key raw material sources from China and other affected regions has resulted in higher costs for plastic inputs, with estimates suggesting increases of 12-20%.5
Given Bangladesh’s dependency on imported polymer resins and machinery, U.S. and EU tariffs on key raw materials such as polyethylene (PE), polypropylene (PP), and PVC as well as finished items like sacks, films, and sheets have raised landed input costs.
These cost hikes threaten to squeeze profit margins, elevate consumer prices, and erode the competitiveness of Bangladeshi manufacturers in global export markets. For instance, the U.S. imposed tariffs up to 50% on imports from India, affecting various sectors, including chemicals and plastics. 6
In response to escalating U.S. tariffs, the Bangladesh government has proactively engaged in diplomatic efforts to mitigate trade tensions. Following a 90-day tariff pause initiated in April 2025, Bangladesh submitted a comprehensive work plan to the United States Trade Representative (USTR) aimed at reducing the bilateral trade deficitand addressing tariff disparities. As a result, the U.S. agreed to lower the reciprocal tariff on Bangladeshi exports from 35% to 20%, effective August 7, 2025. 7
To further bolster its position, Bangladesh has committed to increasing imports of U.S. agricultural products, including 700,000 tons of wheat annually over the next five years.8 Additionally, the country is negotiating a Free Trade Agreement (FTA) with the U.S., focusing on enhancing access to U.S. cotton and raw materials, which are crucial for its textile industry.
However, the effectiveness of these measures remains contingent on the evolving political landscape and the outcomes of ongoing trade negotiations.9
The intensified trade conflict between the United States and China has continued to reshape global trade flows and investment strategies through 2025. While both sides have stepped back from the extreme tariff levels imposed earlier in the decade, duties remain substantial.
As of September 2025, the U.S. maintains tariffs in the range of 30 to 40% on Chinese plastics, petrochemicals, and machinery; down from peaks of over 145%, while China has retaliated with rates averaging 20–25% on U.S. exports, particularly in chemicals, automobiles, and agricultural goods.10
This tit-for-tat escalation has left global supply chains fragile, especially for intermediate goods like polymers, resins, and industrial plastics that are critical to downstream manufacturing in Asia. Companies are contending with higher input costs, shipment delays, and the constant risk of policy reversals.
The uncertainty has also contributed to elevated volatility in commodity prices, with polyethylene (PE) and polypropylene (PP) spot prices fluctuating sharply in Asian markets.11
While the mid-2025 tariff truce offered brief relief in moderating duties on both U.S. and Chinese goods, it remains a short-term reprieve rather than a structural resolution to ongoing trade tensions. At present, firms and governments alike are redirecting investments and reconsidering sourcing strategies, with ripple effects across developing economies such as Bangladesh that rely heavily on imported raw materials for their plastics and petrochemical industries.
For Bangladesh, the ongoing trade tensions carry significant implications. As a country deeply embedded in global supply chains, especially in RMG and textiles, and plastics, any disruption in trade flows or rising input costs threatens economic stability.
Yet there is emerging evidence that Bangladesh is beginning to benefit from the shifts caused by high U.S. tariffs on China and India. Exporters report increased inquiries from U.S. buyers for goods like hardware, construction materials, PVC pipes and PP woven bags – items that were traditionally sourced from India or China.12
On the other hand, Chinese companies are making big moves in Bangladesh. Recently, the Chinese began investing in Bangladesh to take advantage of its comparatively lower tariffs and cost-effective manufacturing environment; over USD160 million in Chinese-backed projects covering garment and accessory factories are underway.13
Moreover, Bangladesh secured a 20% tariff rate for its garment exports to the U.S., down from an initially proposed higher rate which places it in a more favorable position relative to competitors facing steeper tariffs.
These advantages suggest that Bangladesh might gain market share and export orders in the near term. However, this opportunity depends on continued improvements in local supply chains, regulatory stability, and infrastructure to meet rising demand.
For Bangladesh, the shifting trade dynamics offer a chance to capitalize on others’ challenges; even as risks remain. With the U.S. reducing reciprocal tariffs Bangladeshi-made goods to 20% in August 2025, the garment sector is seeing stronger demand: in July-August 2025, RMG exports rose by ~9.6% year-on-year to USD 7.13 billion.14
This surge is pushing up demand for downstream plastics such as polybags, packaging films, hangers, and protective wraps which are critical inputs for apparel export logistics. Further compounding this argument, Bangladesh’s plastic sector has shown a solid growth, plastic exports rose by 21.25% in the first eight months of FY 2024-25.15
The recent boom in garment shipments has created increased requirements for packaging and processing materials. This uptick has translated into tangible growth for Bangladesh’s plastics sector, with exports surpassing USD 203 million in the first eight months of FY 2024–25, highlighting the country’s expanding role in global supply chains.16 The plastic packaging market is projected to grow at a CAGR of 7.8% from 2025 – 2031, further supporting opportunities tied to RMG and manufacturing activity.17
The country is cautiously optimistic, as it aims to capture around 1% of the USD 721 billion global plastics market by the end of 2025, potentially generating export revenues of roughly USD 6 billion.18 However, challenges remain, including tariff uncertainty, rising input costs, and infrastructure constraints.
Nevertheless, with targeted investments in supply chain resilience, raw material security, and sustainable production, Bangladesh is well-positioned to turn these opportunities into lasting growth, solidifying its role in the global plastics market.
The article was authored by Rafayet Khan, Project Manager at LightCastle Partners. For more information, please reach out to us at: [email protected]
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