Tariff strategy: Are Chinese manufacturers moving to Bangladesh?

The economic conflict between China and the United States, which began in 2018, has continued to evolve over the years, becoming a defining feature of global trade dynamics. What started as a series of tariffs and trade barriers imposed by Washington on Chinese goods quickly escalated into a full-blown trade war.

Though a partial truce in the form of a phase-one agreement was reached in January 2020, the rivalry has intensified again in recent years—especially in 2025, following the return of Donald Trump to the White House for a second term as the President, following which Trump started imposing reciprocal tariffs on countries.

Under the renewed Trump administration, trade tensions were reignited as new tariffs were introduced, not only affecting China but also a host of nations. Both China and the US raised tariffs on each other’s goods to over 100 per cent before briefly stepping back to reduce rates under a temporary truce.

This pause, which was originally scheduled to expire on August 12, was extended by another 90 days until November 10, offering a narrow window for further negotiations. Yet the underlying tensions have remained unresolved. Earlier this year, at the peak of the renewed trade war, the US introduced sweeping retaliatory tariffs of 145 per cent on a broad range of Chinese imports. In response, China retaliated with tariffs reaching 125 per cent on American goods, marking one of the most severe escalations in recent years.

With the threat of steep reciprocal tariffs looming large, Beijing is apparently exploring alternative trade and investment strategies to mitigate risk, and a key part of this strategic pivot seems to be centred on Bangladesh.

Recent developments suggest that China is ramping up investments in Bangladesh as part of a broader plan to establish an alternative production base, potentially enabling Chinese firms to navigate around the US-imposed trade barriers. This trend comes amid Washington’s decision to lower reciprocal tariffs on Bangladeshi exports — Bangladesh secured a 20 per cent tariff rate, comparable to many of its competitors.

However, the availability of affordable manpower and its well-established standing as a manufacturing hub only enhanced the country’s appeal as a destination for manufacturers seeking to hedge against geopolitical uncertainty while also enjoying cost-competitiveness.

The relocation effort appears to be gaining momentum in sectors such as readymade garments and textiles —areas where Bangladesh already holds a competitive edge.

Several Chinese firms have already committed to several large-scale projects in the country, as per reports. Among them, China Lesso Group is reportedly investing $32.77 million in a facility located in the National Special Economic Zone, signalling a long-term manufacturing commitment. Similarly, Kaixi Group is setting up a $40 million apparel and accessories plant within the BEPZA Economic Zone in Mirsarai, a rapidly developing industrial hub.

As per reports, additional investments include Handa (Bangladesh) Garments Co. Ltd, which is channelling $41.3 million into an automated garment manufacturing facility designed to produce 72 million pieces annually. Another notable entrant is Unifa Accessories (BD) Co. Ltd, a joint venture between Chinese and British Virgin Islands stakeholders, which is reportedly investing $48.7 million to manufacture 28 million fashion products a year.

The timing and scale of these investments suggest that China is proactively positioning itself to absorb future trade shocks, particularly those that may arise if the United States imposes further punitive measures after the current tariff reprieve ends. By expanding its footprint in Bangladesh, Chinese firms can continue accessing the lucrative US market through a more favourable trade corridor, thereby insulating themselves from the impacts of higher tariffs.

In light of these developments, the China-Bangladesh trade axis is apparently emerging as a critical component of Beijing’s broader strategy to navigate the complexities of the US-China economic standoff. With Bangladesh offering a combination of tariff advantages, a growing industrial base, and affordable labour, it presents a viable solution for Chinese manufacturers to mitigate the risks posed by an increasingly protectionist US trade policy.

As the November deadline approaches, the investment surge into Bangladesh, many feel, reflects a calculated effort by China to preserve its global trade flows in an era of heightened economic nationalism.

ALCHEMPro News Desk (DR)