Tariff structures play a critical role in shaping international trade patterns and can directly influence a country’s economic diplomacy with key trading partners. Fiscal measures — including customs duties and taxes — announced through national budgets are often used not only to achieve economic objectives but also to advance broader foreign policy goals.
Against this backdrop, the BNP-led government is set to present its first national budget in nearly two decades today (Thursday), with economists and former diplomats suggesting that several fiscal measures could have implications beyond trade and investment, extending into Bangladesh’s diplomatic and strategic relationships.
The budget for the 2026–27 fiscal year comes at a time when Dhaka is actively engaging major economic partners and preparing for Prime Minister Tarique Rahman’s upcoming visit to China later this month.
As Bangladesh seeks to attract investment, diversify trade, and strengthen economic cooperation with major partners, the tariff structure set to be proposed is being closely watched for its potential impact on international commerce.
A former diplomat, who previously held a senior policymaking position at the foreign ministry, said fiscal policy has long been an important instrument of statecraft.
“Certain provisions in a national budget serve multiple purposes. Tariff policies, in particular, can be used to strengthen and maintain relations with foreign countries while also advancing domestic economic objectives,” he said.
According to him, increases or reductions in duties influence the competitiveness of imported goods, alter trade flows, and often reflect a government’s broader diplomatic and economic priorities.
“Trade policy and foreign policy are closely interconnected. Decisions on tariffs can affect which countries benefit most from access to a market and, in turn, influence bilateral economic relations,” he added.
New duty structure
Finance Minister Amir Khasru Mahmud Chowdhury is expected to place the Finance Bill for the next fiscal year before parliament today, proposing a revised duty structure that could significantly alter import incentives.
According to officials familiar with the proposals, customs duties on electric vehicles (EVs) are likely to be reduced substantially. Vehicles valued at up to $25,000 may face a duty rate of around 64 per cent, while those valued at up to $50,000 may be subject to an 80 per cent duty.
In addition, duties on EV charging equipment are expected to be reduced from 39.75 per cent to zero in an effort to promote electric mobility and support the development of charging infrastructure.
As China is currently the world’s largest exporter of electric vehicles, batteries, and related technologies, analysts believe Chinese manufacturers could be among the biggest beneficiaries of the changes.
By contrast, duties on conventional vehicles with engine capacities between 1,200cc and 1,600cc are expected to increase from 132 per cent to 155 per cent. This means that a vehicle imported at a cost of Tk10 lakh could face an additional tax burden of at least Tk2.5 lakh under the revised structure.
Since Japan remains Bangladesh’s principal source of imported passenger vehicles, the expected increase could significantly affect imports from that country.
The government is also expected to reduce duties on a range of industrial raw materials and machinery to support manufacturing and investment. Given China’s dominant position in global industrial supply chains, lower tariffs in these sectors could further increase imports from the country.
Ahead of Tarique’s China visit
Prime Minister Tarique Rahman is scheduled to visit China from 23 to 26 June, a trip expected to focus on trade, investment, infrastructure, and broader economic cooperation.
Trade policy analyst and negotiator Mostafa Abid Khan said the budget measures could have relevance for the upcoming visit.
“The new budget is likely to have an impact on the prime minister’s visit to China because some of the tariff reforms may encourage higher imports from Chinese suppliers,” he said.
According to Khan, lower duties on electric vehicles, machinery, and industrial inputs could strengthen commercial links between the two countries and create a more favourable environment for economic cooperation.
“Fiscal policy is a powerful tool in foreign relations because it directly affects international trade and investment flows,” he said.
Analysts note that tariff policy is increasingly being used by governments worldwide as an instrument of economic statecraft. They point to the United States’ extensive use of tariffs in recent months to reward trading partners, protect domestic industries, or exert pressure on foreign governments.
Against that backdrop, Bangladesh’s first budget under the BNP government is being closely watched not only for its domestic economic implications but also for the signals it may send to key international partners as Dhaka seeks to expand trade, attract investment, and strengthen strategic economic relationships.
