2pc tariff cut is disappointing

The Bangladesh government started discussions right after the US declared reciprocal tariff on Bangladeshi products on 2 April. Our chief adviser wrote to the US president where we urged for some concessions. The commerce adviser also spoke to them.

The government even offered duty concessions on certain products that might benefit the US in the annual budget for the 2025-26 fiscal. Apart from that, we continued talks on the non-tariff barriers mentioned by the USA, including complications in investment and implementation of the intellectual property law.

Following all the talks and discussions over the last three months, the imposed reciprocal tariff has come down from 35 per cent from 37 per cent. In other words, we could not yield that much from those discussions and talks.

As part of the tariff discussions, the United States had sent a draft of a framework agreement, but we have no idea what it contained. We do not clearly know what the US demanded and what it offered in return, nor do we know what Bangladesh asked for and what it offered in exchange—none of these four aspects are clear to us.

After Trump imposed reciprocal tariffs, we had the impression that Bangladesh was the very first among all countries to begin discussions. But after three months of talks, all we have learned is that tariffs have been reduced by just 2 per cent. That is undoubtedly disappointing.

The government has stated that the draft agreement included a non-disclosure clause. However, I believe the government could have formed a special team comprising stakeholders and experts to handle the negotiations. If our strategy had been shaped through discussions with such a team, it could have been more effective. But what we saw was that only a small group of people handled the matter, and in the end, it appears to have brought no real benefit.

The new tariff rate imposed by Trump is quite concerning for us as our main competitor Vietnam has succeeded in bringing down the new tariff rate to 20 per cent, which is 15 per cent more than us. It will result in a massive blow for the readymade garment industry of the country. It is hard to say how much of this additional duty foreign buyers will be willing to bear. It is likely they will try to pass the burden onto our exporters. But staying competitive with such a significant tariff gap is extremely difficult.

Overall, it can be said that the newly imposed reciprocal tariff has created a big threat for us. For this reason, we may lose our competitiveness in the short term. And if the tariff remains in place, our buyers could start turning elsewhere in the medium term. Since the United States is a major importer, we must continue engaging in dialogue with them. The US has announced that the new reciprocal tariffs will come into effect from 1 August, so over the next three weeks, we need to assess what more we can offer them.

Various geopolitical and economic factors are also tied to the trade discussions—things we are not privy to. Now we need to consider how much Bangladesh can realistically offer, as being a member of the World Trade Organization (WTO) imposes a range of restrictions. From that perspective, many options may not be feasible for us. Therefore, we must proceed with careful consideration of these issues.

We must certainly make efforts to reduce the tariffs. If we can bring them down to at least the same level as Vietnam's, we will be in a fairly manageable position in terms of competitiveness. But if the 35 per cent tariff remains in place, it will likely become very difficult—or even impossible—for us to cope with the situation.