The world is witnessing a scenario where superpowers engage with each other in trade wars, commercial rivalries, and tensions regarding economic dominance. Bangladesh, as a middle-income country, can face impacts both economically and geopolitically from this effect. As there remains a possibility of bewilderment in sustaining a balanced foreign policy by keeping interests protected.
To navigate U.S.-China tensions, Bangladesh must adopt a multifaceted foreign policy. This strategy should leverage Bangladesh’s geopolitical links with both the US and China while simultaneously mitigating overdependence by fostering stronger ties with the European Union, Turkey, Italy, France, Brazil, and other markets.
Since August 2024, the newly formed Interim government has announced its intention to pursue comprehensive diplomacy to “recalibrate” alliances and mitigate geopolitical concerns. The ongoing US-China trade dispute during Donald Trump’s administration had a significant impact on Bangladesh, particularly when the United States imposed a 37% duty on imports from Bangladesh in April 2025 as part of Trump’s extensive tariff reforms. Although the Ready-Made Garments export has risen to almost 8.84% in the fiscal year of 2025, reaching $39.4 billion.
In the fiscal year 2024–25 (July–January), the United States is the foremost single-country market for Bangladeshi Readymade Garments (RMG), accounting for 18.99% of Bangladesh’s total RMG exports, valued at $4.47 billion. We have emerged as the fastest-growing clothing provider to the US, with garment exports totalling $2.22 billion in the first quarter of 2025, reflecting a 26.64% annual growth rate.
During an official visit to Bangladesh in March 2025, China’s Xi pledged $2.1 billion in investments, loans, and grants, marking the most significant contribution from any single nation to date. This marked China’s initial expression of interest in Bangladesh. In September 2024, China ranked as the second-largest foreign direct investment (FDI) contributor to the country, with a total of $2.67 billion, following remittances.
Maintaining market access in the United States has become a paramount priority for Bangladesh. We cannot quantify the losses resulting from the implementation of tariffs, but we can mitigate non-tariff obstacles by negotiating preferred market access terms with the United States Trade Representative. It is now imperative to enhance product quality and ascend the value chain to technical textiles and specialised apparel to justify elevated price points notwithstanding tariffs. Capitalizing on China’s relocation of its manufacturing sector to Bangladesh by augmenting the number of Special Economic Zones (SEZs) and enhancing infrastructure, encompassing industrial zones and Mongla Port. They should advocate for readily accessible, low-interest, and long-term loans in the current negotiations for the Free Trade Agreement (FTA) with China.
The current government’s effort and strategic recalibration in this regard can significantly contribute to resolving these difficulties. Since August 2024, Chief Adviser Muhammad Yunus has been pursuing a “360-degree diplomacy” that entails engaging all significant international actors, including the US, China, India, Japan, Turkey, and the European Union, to establish a balanced contribution.
To navigate in murky waters of Indo-Pacific geopolitical tension, a diplomatic reconfiguration is necessary to open up spaces for Bangladesh. Besides, balancing the big powers can enhance Bangladesh’s sovereignty and negotiating leverage; however, it also subjects the nation to the perils of great-power rivalry, including the temptation or pressure to align with either the United States or China in their strategic conflict. Besides geopolitical calculations, many middle powers are significant for their own economic and security offerings. For instance, take the role and potential of the EU in Bangladesh’s economy.
The current export focus value (in billions) of readymade garments to the European Union (EU) is approximately 11.81, with a projected growth of 50.15% by January 2025. The European Union has emerged as the second-largest market for Bangladeshi RMG products, following the USA.
Furthermore, the subsequent measures to promote diversification of Foreign Direct Investments involve matched-funding programs and regulatory relaxation to attract investments from Italy, France, Brazil, and Turkey in the pharmaceuticals, IT services, and Agro-processing sectors, respectively.
In 2025, a notable milestone in the commercial relations between Brazil and Bangladesh occurred, as Brazilian exports to Bangladesh maintained their dominance, while initiatives such as the Made in Bangladesh Expo promoted a surge in Bangladeshi exports to Brazil. The primary emphasis of their bilateral agenda is on business, investments, and joint ventures; yet, both nations seek to enhance their partnership.
On the other hand, middle powers such as Turkey, Italy, and France etc. could be potential defence and security equipment sellers for Bangladesh. Bangladesh’s traditional dependence on Chinese military equipment has already come under the scrutiny of the West, particularly the US. The US has also expressed its desire to sell its technologies to Bangladesh, which may not be affordable. In this context, expanding the options would be a strategic benefit for Bangladesh as these middle powers do not have direct geopolitical interests here.
Enhancing intra-regional commerce by fostering improved connectivity and reducing trade expenses with SAARC+ nations, particularly Pakistan and Turkey, to mitigate the influence of the USA, China, and India on Bangladesh. Besides, enhancing relations could also open new avenues for Bangladesh’s labour market abroad, which provides the nation with more than USD 30 billion in remittances.
The government and local industries need to be proactive in marketing and branding efforts to enhance the proposed idea. In the long term, it would help Bangladesh to navigate the already heated geopolitics and ensure uninterrupted economic development in the next decade.
At this juncture, Bangladesh’s paramount task is to institutionalise multi-sector diplomacy by forming a National Foreign Policy body that includes government officials, business leaders, and representatives from civil society. This body should aim to facilitate initiatives to diversify and engage equitably with key powers. By employing a pragmatic dual-track strategy, implementing ‘multi-vector diplomacy’ and prioritising export diversification, Bangladesh can safeguard its export sector while enhancing Chinese investment, ensuring access to the US market, and fostering resilience through new global partnerships, if possible, with South-East Asian countries like Malaysia, Singapore, and Indonesia.
Upon implementation, this multifaceted strategy will accelerate Bangladesh’s economic progress, strengthen its strategic autonomy, and enhance its regional standing as a rising middle power. Bangladesh now needs to reformulate its policies to address the upcoming challenges of superpower rivalries in the future.