Bangladesh could face renewed tariff measures from the United States over allegations of child and forced labour, but such moves may be driven as much by political and commercial interests as humanitarian concerns, economist and Centre for Policy Dialogue (CPD) Distinguished Fellow Dr Mustafizur Rahman has said.
Speaking at a CPD media briefing in Dhanmondi on Thursday, Dr Rahman questioned the rationale behind discussions in the US over imposing an additional 10 percent tariff on Bangladeshi exports instead of extending support to address child labour issues.
“There is talk about forced labour. They try to see these issues through their own lens and often fail to understand the realities of countries like Bangladesh,” he said.
Referring to child labour in sectors such as brick kilns, he said many cases are linked to economic hardship and family survival. “The question is whether they will use this issue as a justification to impose additional tariffs on our exports,” he added.
Dr Rahman argued that if the US was genuinely concerned about child labour, it could establish assistance programmes or funds to help Bangladesh eliminate the practice rather than resorting to trade restrictions.
“When instead an additional 10 percent tariff is imposed on exports, questions naturally arise,” he said. “Is this really out of concern for child labourers, or is it linked to the reciprocal tariffs that were earlier struck down by the courts and later reintroduced temporarily through presidential authority?”
He said there was “clearly a political economy dimension” behind the issue, noting that the temporary tariff measures introduced under special executive powers are due to expire in July.
The remarks came during a CPD briefing titled ‘Bangladesh Economy in FY2025-26: Multidimensional Challenges in a Transition Period’, where the organisation also raised concerns over the banking sector, inflation and revenue collection.
Presenting the keynote paper, CPD Executive Director Dr Fahmida Khatun said the apparent decline in default loans did not reflect genuine improvement in the banking sector, as the situation had been masked through loan rescheduling, restructuring and write-offs.
According to CPD data, the non-performing loan ratio in the banking sector declined from 35.7 percent in September 2025 to 32.26 percent in March 2026.
However, Dr Khatun said this reduction should not be interpreted as an improvement in asset quality.
She noted that asset quality reviews (AQRs) are currently underway at 17 banks. In six of those banks, reviews uncovered substantially higher default loans than officially reported, indicating major discrepancies between published figures and the actual financial condition of the institutions.
The CPD report also showed excess liquidity in the banking sector rising from 43 percent in May 2025 to 55 percent in March 2026, while the advance-deposit ratio fell from 0.89 to 0.84 during the same period.
“This suggests banks are becoming more cautious about lending and that private sector credit demand remains weak,” Dr Khatun said.
The think tank recommended stricter loan classification and provisioning policies, gradual withdrawal of regulatory relaxations, and disclosure of actual default loans including rescheduled and restructured accounts. It also called for strengthening the independence and supervisory capacity of Bangladesh Bank.
On public finances, Dr Khatun said the revenue target for the current fiscal year was unrealistic. Revenue collection grew by only 6.9 percent during July-March, while achieving the annual target would require an 84.6 percent increase in collections in the final quarter.
Between July and April, the National Board of Revenue’s shortfall stood at Tk104,533 crore, she added.
She said persistent revenue shortfalls over the past decade raised serious questions about the credibility of revenue targets and highlighted the need for reassessment.
The CPD also warned that inflationary pressures remained elevated in both food and non-food sectors. Overall inflation stood at 9.04 percent in April 2026, with food inflation at 8.39 percent and non-food inflation at 9.57 percent.
Dr Khatun said rising costs of fuel, transport and services were intensifying inflationary pressures. LPG prices increased by 40.5 percent between March and June, while the prices of essentials such as rice, lentils and eggs also climbed sharply.
Although wages grew by 8.16 percent, the increase remained below the inflation rate, reducing people’s real purchasing power, she added.
CPD Research Associate Helen Mashiat Priyoti said the recent increase in electricity prices would add further pressure on inflation.
While some adjustment was necessary due to higher global fuel and electricity prices, she argued that a second round of fuel price hikes was unnecessary, as international fuel prices are currently declining and the Bangladesh Petroleum Corporation could have absorbed the pressure through its own financing.