Tariff deal: Lack of preparation major reason behind delay

Bangladesh has been slow to begin formal negotiations with the United States on reducing tariff rates. The government also took considerable time to consult relevant stakeholders, including trade researchers, exporters, and businesspeople.

According to those involved, the primary reason a tariff agreement with the US has not yet been reached is a lack of adequate preparation on the Bangladesh government’s part.

Officials from the Ministry of Commerce, business leaders, and researchers all say that the Commerce Ministry should have led the negotiation and bargaining process regarding the US-announced tariff changes.

However, from the start, Bangladesh sent individuals to the US who were unable to advance the talks significantly. Sheikh Bashir Uddin, the Commerce Adviser—who holds the primary responsibility for negotiations—only got involved at a later stage.

On 2 April, US President Donald Trump announced reciprocal tariffs on 60 countries, including Bangladesh. Just five days later, on 7 April, Bangladesh sent two letters to the US.

Interim government Chief Adviser Professor Muhammad Yunus wrote to President Trump requesting a three-month suspension of the decision. Commerce Adviser Sheikh Bashir Uddin sent a separate letter to US Trade Representative (USTR) Ambassador Jamieson Greer, expressing Bangladesh’s commitment to strengthening bilateral trade relations through constructive dialogue.

On 9 April, the Trump administration agreed to suspend the reciprocal tarriffs for three months, maintaining a minimum tariff of 10 per cent. This suspension expired on 9 July. A day before, on 8 July, Trump announced a new tariff rate of 35 per cent on Bangladeshi imports, effective 1 August. Currently, Bangladesh pays an average 15 per cent tariff when exporting to the US; the new rate would raise this to 50 per cent.

In the meantime, competitor countries like Vietnam and Indonesia have progressed toward agreements with the US, allowing them to export at reduced tariff rates of 20 per cent and 19 per cent, respectively.

On 16 April, at Bangladesh’s invitation, US Deputy Assistant Secretary of State for South and Central Asia Nicole Chulick visited Dhaka and met with Lutfey Siddiqi, Special Envoy on International Affairs to the Chief Adviser. Following the meeting, Lutfey Siddiqi posted on Facebook that important follow-up meetings with USTR, the Department of Commerce, and the State Department had been scheduled for the following week in Washington, DC.

On 21 April, Siddiqi attended these meetings in Washington. That same day, the IMF and World Bank’s Spring Meetings began, attended by Financial Adviser Salehuddin Ahmed, Finance Secretary Khairuzzaman Mozumder, and others.

Sources in the Ministry of Commerce reported that Siddiqi led the 21 April USTR meeting, but the talks yielded no meaningful outcomes. Commerce Adviser Sheikh Bashir Uddin was absent. No further government action on the reciprocal tariff issue was reported for the entire month of May, and Siddiqi withdrew from the negotiation process thereafter.

In early June, the Ministry of Commerce began exchanging letters with USTR regarding a Non-Disclosure Agreement (NDA). Bangladesh and the US signed the NDA on 12 June, and held an online meeting on 17 June.

Commerce Secretary Mahbubur Rahman told Prothom Alo that the US considered the 17 June meeting the first round of formal negotiations.

Meanwhile, the US sent a draft of the proposed tariff agreement to Bangladesh. The Ministry of Commerce reviewed and analysed the draft internally, according to ministry sources.

While talks with the Commerce Ministry were still ongoing, National Security Adviser Khalilur Rahman joined the negotiation team. On 26 June, he met with USTR officials and reportedly conveyed to the government that, compared to other countries, Bangladesh was ahead in the talks.

Khalilur Rahman met with USTR again on 3 July, this time joined by Commerce Adviser Sheikh Bashir Uddin. Bangladesh reiterated its demand for reduced reciprocal tariffs based on its Least Developed Country (LDC) status. Sources said the USTR offered a diplomatic response, indicating the matter would be considered.

Following this meeting, based on a foreign media report, Khalilur Rahman reportedly suggested to the government that the Trump administration might extend the tariff suspension for another year.

Between 9 and 11 July, Bangladesh held further meetings with USTR in the US—considered by the US to be the second round of formal negotiations. This time, Khalilur Rahman did not attend; Commerce Adviser Sheikh Bashir Uddin led the delegation. The team returned to Bangladesh on 13 July.

On 8 July, the day before the delegation departed, Trump sent a letter to Chief Adviser Professor Muhammad Yunus, stating that the reciprocal tarriff on Bangladeshi goods would be 35 per cent instead of the initially proposed 37 per cent.

Upon returning, on 14 July, the Commerce Adviser held a meeting with business leaders and economists at the Secretariat. He also addressed a press conference, though he refrained from answering many questions citing the NDA. He stated that another round of talks with the US would be held and more time had been requested.

On Wednesday, the Commerce Ministry held an inter-ministerial meeting attended by top officials from ministries and departments including Food, Agriculture, Power and Energy, and Foreign Affairs. That afternoon, the Commerce Adviser also held online meetings with Chevron and Excelerate Energy. Another meeting is scheduled with the American Apparel & Footwear Association on 22 July.

Commerce Secretary Mahbubur Rahman told Prothom Alo yesterday, “There will be regular meetings over the next few days. After that, we will prepare a position paper to send to the US, which will serve as the basis for further discussions. We are hopeful of a positive outcome in the end.”

Business leaders and economists believe that the lack of progress in reducing the US reciprocal tariff is due to significant shortcomings in preparation.

AK Azad, Managing Director of Ha-Meem Group, one of Bangladesh’s top exporters to the US market, told Prothom Alo, “We failed to initiate timely discussions and negotiations. When the US President made this move, we should have treated it with the highest priority. But what did we do? First, we appointed the Chief Adviser’s Special Envoy for International Affairs, then the National Security Adviser to lead the talks. Importers of our goods have expressed disappointment, saying Bangladesh is lagging behind other countries in the tariff negotiations.”

Azad added, “At no stage were business representatives included in the talks. No lobbyists were appointed either. People without any bargaining experience were given responsibility. Frankly, we are in the dark.”

Former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Fazlul Hoque echoed this view, telling Prothom Alo, “I understand the need for a Non-Disclosure Agreement. But why can’t business leaders at least be informed of what’s in the draft tariff agreement? Even deputy or joint secretaries have access to that.”

Fazlul Hoque continued, “I’m not saying including business representatives in negotiations would have magically changed everything, but I must ask—why won’t you even ask us for input?”

Economists share similar concerns. Selim Raihan, Executive Director of the South Asian Network on Economic Modeling (SANEM), said, There’s a lot of opacity around this entire issue. Since the matter involves factors beyond just trade, there should have been a strong, multilateral team leading the negotiations from the beginning.

Selim Raihan noted that the Trump administration is handling each country differently. “Just yesterday, Malaysia’s Investment and Trade Minister Tengku Zafrul Aziz publicly disclosed what the US is asking from them. Yet our Commerce Adviser says he cannot share anything due to the NDA.”