Where does Bangladesh stand amidst US's global retaliatory tariffs?

After much negotiation, the United States has agreed to reduce the imposed tariff rate on Bangladeshi goods exported to the US from 35% to 20% during the third round of discussions. On April 2, then-US President Donald Trump imposed 'retaliatory' tariffs on goods from 57 countries—a list that expanded to over 90 by July. Before the new policy was implemented, Bangladeshi exports faced an average tariff of 15.5%. The new 35% hike brought the total to 50%. However, as global economic uncertainty followed the announcement, Trump suspended the new tariffs for three months and allowed countries to negotiate fairer rates.

Taking advantage of this opportunity, Bangladesh managed to secure a 15% reduction in the third round of talks. Still, Bangladeshi products entering the US must now pay a combined 35.5% tariff—15.5% from the previous rate and 20% from the revised new rate.

Although the tariffs will be collected from American importers, the increased cost will ultimately be added to the price of goods in the US market. As a result, the higher the tariff on a country’s goods, the more expensive those goods become for American consumers. Given the relatively low price of Bangladeshi garments, American importers have long preferred sourcing from Bangladesh. But it's not just Bangladesh—countries like China, India, Sri Lanka, and Vietnam also faced increased U.S. tariffs. All affected countries were offered a chance to negotiate, which is why the talks were of great importance. For this reason, Bangladeshi garment exporters even considered hiring lobbyists to advocate on their behalf. In the end, the reduction was achieved without lobbyists; instead, Bangladesh's trade adviser led the delegation during the negotiations.

The interim government was ecstatic over the trade adviser’s success. It is undeniable that any kind of victory brings joy. Riding this wave of triumph, Chief Adviser Dr. Muhammad Yunus remarked, “We sincerely congratulate the Bangladeshi negotiation team for successfully concluding a historic trade agreement with the U.S. This is an important diplomatic victory.” The Energy Adviser was even more expressive, noting that the Trade Adviser proved his critics wrong and validated his own capabilities.

Dr. Yunus also made a notable claim: that the negotiators had skillfully navigated complex issues of national security. He went on to say that this agreement would preserve Bangladesh’s competitive advantage and showcase its growing global stature, unlocking paths to greater potential, accelerated growth, and sustainable prosperity. He didn’t stop there—he claimed the deal was a “shining example of our national resolve and bold economic vision.”

But is there truly any substance behind all this celebration? The Chief Adviser’s ornate language seems to have little real connection to the deal itself. For example, there was a previous uproar over a statement by Ashiq Chowdhury, Executive Chairman of the Bangladesh Investment Development Authority (BIDA) and Bangladesh Economic Zones Authority (BEZA), when he failed to attract investment—now, no one even mentions him. Furthermore, the interim government is unelected, so there is no political need for self-congratulatory praise like in party governments. Elected governments often highlight their achievements to win public support, as the Awami League did with the satellite launch, maritime victories against India and Myanmar, and the implementation of megaprojects like the Padma Bridge, metro rail, and nuclear power plant. While there’s no issue in publicizing development, these accomplishments are merely the job they were elected to do.

Unfortunately, the state of affairs has deteriorated so much that if a government official performs their duties without asking for bribes, people become overly grateful—as if they’ve received more than they were entitled to.

It’s unclear how the Chief Adviser’s declared “path to greater potential, faster growth, and lasting prosperity” has been unlocked through this agreement. There’s little reason for such jubilation. The tariff has not been removed—only reduced from 50% to 35.5%. This increase from the original 15% rate will likely make Bangladeshi goods, especially garments, more expensive in the US market, potentially reducing demand. Even so, had Bangladesh secured a better rate than other countries, the negotiators would have deserved praise. But the 20% rate agreed upon applies not only to Bangladesh but also to Sri Lanka, Thailand, Taiwan, and Vietnam. Meanwhile, the UK and Falkland Islands got a 10% rate, and about 40 countries, including Afghanistan, received a 15% rate. Countries like Cambodia, Indonesia, Malaysia, Pakistan, and the Philippines got 19%.

The variation in tariff rates among countries suggests that the negotiations weren’t driven by the merits of the discussions themselves but by geopolitical and commercial considerations, including promises to increase imports from the US and adhere to confidential terms.

The US imposed higher tariffs mainly on countries with whom it has a trade deficit to reduce their exports. Simultaneously, it encouraged these countries to balance the deficit by purchasing more US goods. Bangladesh, for example, was pressured into agreeing to purchase 25 passenger Boeing aircraft and 3.5 million tons of wheat from the US. As a result, buying these products competitively from other countries is no longer an option. There’s also ongoing pressure to import US soybeans and cotton, and discussions are underway about importing LNG and military equipment. In addition to increasing imports, Bangladesh also had to promise to reduce tariffs on US goods.

This reveals that the negotiations weren’t effective on their own—the key factor in securing reduced tariffs was Bangladesh’s willingness to help the US reduce its trade deficit and commit to additional imports. The US, known for its shrewd business practices, doesn’t easily compromise—not even for its closest ally, Israel, which also faced a 15% tariff hike.

The US decision wasn’t based purely on economic interests either. Countries willing to strengthen economic and security ties with the US were given tariff concessions. According to Dr. Yunus, Bangladesh's negotiators navigated complex national security issues during the talks—but what those were has not been disclosed. The fact that the National Security Adviser was also part of the delegation strongly indicates the discussions extended beyond trade. It’s likely that Bangladesh had to promise a gradual reduction in trade and economic ties with Russia and China. Bangladesh signed a Non-Disclosure Agreement (NDA) with the US during these tariff discussions. Because the terms remain confidential, we cannot accurately assess what Bangladesh may have had to concede in exchange for reduced tariffs.

In reality, the key determinant for tariff reductions was not the negotiating skill of any country’s delegation but how much each country offered to the US in return. Do we assume that countries granted a 10% or 15% tariff rate had more skilled negotiators than us? Are Chinese and Indian negotiators less competent? Clearly not. But both countries were unwilling to compromise on US interests in trade or security. India not only buys Russian oil but refines and resells it to other countries. Had India agreed to stop trading with Russia, its tariff rate might have been reduced to 10–15%. After all, for the U.S., keeping India close is essential in its strategy to contain China.

Bangladesh’s tariff rate of 20% is the same as that imposed on Sri Lanka and Vietnam—also major garment exporters. Countries like Indonesia, Cambodia, and Pakistan will benefit from a slightly lower 19% rate. However, it’s some relief that India and China—two of Bangladesh’s biggest competitors in the garment sector—are facing even higher tariffs. Therefore, Bangladesh's garment exports may not suffer significantly despite the increased tariffs.

Donald Trump made it clear during his campaign that “America First” would be his governing principle—US interests come above all else. He governed with that principle during his previous term and continues to do so. The US wants to maintain its dominance in global trade and military power. Thus, tariff reductions were not based on any delegation’s negotiation skills but on how much a country conceded in favor of US interests.

In the end, recognition wasn’t given to any country’s negotiating ability but to the trade and security concessions laid out on the table to favor US priorities.

Ziauddin Ahmed is a former Executive Director of Bangladesh Bank.