US trade deal: Trump imposes new tariffs, what’s ahead for Bangladesh

Barely two weeks after Bangladesh signed a reciprocal trade agreement with the United States, fresh uncertainty has emerged following a series of rapid tariff decisions by US president Donald Trump.

Under the agreement signed on 9 February, the US reciprocal tariff rate on Bangladeshi goods was set at 19 per cent. However, the Supreme Court of the United States on Friday declared the reciprocal tariffs unlawful previously imposed by the Trump administration on Bangladesh and several other countries.

President Trump expressed strong dissatisfaction with the ruling and promptly announced alternative measures. Within hours, he declared a fresh 10 per cent tariff on goods from all countries under the US Trade Act of 1974. The following day, Saturday, he increased the rate to 15 per cent, stating that the new tariff would take effect from 24 February.

Against this backdrop, questions have arisen over whether the 9 February mutual trade agreement between Bangladesh and the United States will remain valid. There is, as yet, no clarity. Nor is it certain whether the newly announced 15 per cent tariff will apply to Bangladesh. Business leaders believe the latest tariff decision may also face legal challenges in US courts.

Even before the recent developments, the agreement had drawn criticisms. Economists, researchers and business leaders had questioned the immediate past interim government’s decision to sign the deal just three days before the election. They said that it should have been left to the elected government.

The agreement ceremony was attended virtually from Dhaka by then commerce adviser Sk Bashir Uddin and commerce secretary Mahbubur Rahman.

A five-member delegation led by Khadiza Nazneen, director general of the WTO Cell at the Ministry of Commerce, participated in person in the United States.

Speaking at a press conference on 10 February, the commerce adviser said the interim government’s national security adviser and incumbent foreign minister Khalilur Rahman and former chief adviser’s special envoy on international affairs Lutfey Siddiqi played vital roles in finalising the deal.

The commerce adviser on that day described two major achievements from the deal: a reduction in the reciprocal tariff rate from 20 per cent to 19 per cent, and a zero tariff rate for garments exported to the US if manufactured using cotton from the US.

He also stated that any future government would be free to review the agreement if it was deemed contrary to national interests.

Prothom Alo tried to contact the former commerce adviser and the incumbent foreign minister but they could not be reached.

However, former commerce secretary Mahbubur Rahman told Prothom Alo on Saturday that the agreement might ultimately be rendered void, though the situation remains unclear. “We will understand more after 24 February,” he said.

Responding to criticism over the timing of the deal, he remarked, “It had to be signed at that time. Besides, there was no ulterior motive behind this. Many critics have not even read the agreement; some may lack the capacity to do so.”

The US Supreme Court on Friday ruled that Trump imposed the earlier reciprocal tariffs (on 2 April last year) under the International Emergency Economic Powers Act (IEEPA) of 1977, but the act does not authorise the president to impose such tariffs.

In response, president Trump invoked provisions of the Trade Act of 1974 to introduce a new 10 per cent tariff on all countries. Later on Saturday, in a post on Truth Social, Donald Trump posts, “Based on a thorough, detailed, and complete review of the ridiculous, poorly written, and extraordinarily anti-American decision on Tariffs issued yesterday, after MANY months of contemplation, by the United States Supreme Court, please let this statement serve to represent that I, as President of the United States of America, will be, effective immediately, raising the 10% Worldwide Tariff on Countries, many of which have been “ripping” the U.S. off for decades, without retribution (until I came along!), to the fully allowed, and legally tested, 15% level. During the next short number of months, the Trump Administration will determine and issue the new and legally permissible Tariffs, which will continue our extraordinarily successful process of Making America Great Again - GREATER THAN EVER BEFORE!!! Thank you for your attention to this matter. President DONALD J. TRUMP”

The White House also confirmed that the 15 per cent rate will be applied from 24 February. According to the US trade laws, the president could impose tariffs for up to 150 days.

Exporters believe that if the 15 per cent rate applies uniformly to all countries, Bangladesh’s competitive position in the US market may remain broadly unchanged relative to its rivals. However, frequent tariff adjustments within a short period create significant uncertainty for businesses.

“We are not clear what is ultimately going to happen. If the 9 February agreement is automatically nullified, that would be preferable. If not, it warrants reconsideration, as it contains several provisions that may undermine Bangladesh’s interests,” former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Md Fazlul Hoque, said.

On 2 April 2025, president Donald Trump had imposed varying reciprocal tariffs on goods from 157 countries that was supposed to be effective from 9 April. However, he suspended the decision for three months to facilitate bilateral negotiations.

On 8 July, the rate for Bangladesh was reduced by two percentage points to 35 per cent. Subsequently, on 2 August, the two countries reached an understanding at a 20 per cent reciprocal tariff rate, alongside commitments from Bangladesh to increase imports from the US. This has been incorporated in the provisions of the agreement.

Former member of the Bangladesh Trade and Tariff Commission, Mostafa Abid Khan, on Saturday told Prothom Alo that the 9 February agreement has not yet taken effect, as it requires ratification by the parliaments of both countries.

“This provides an opportunity to reassess the entire matter,” he said. “Bangladesh must act more strategically. It would not be prudent for the government to take a definitive position at this stage.”