Trump’s reciprocal tariffs are illegal, Bangladesh must seek alternatives

On 2 April 2025, President of the United States (US) Donald Trump imposed reciprocal tariffs at varying rates on products from 157 countries. The imposition of these tariffs had been anticipated for some time, as Trump had already promised it during his election campaign.

Regarding imposing these reciprocal tariffs, Trump claimed that until now, other countries had been taking advantage of the United States. Through these tariffs, he said, that exploitation would end.

Excitedly, he dubbed the day as the ‘Liberation Day’ for the US. However, the US Supreme Court has declared these reciprocal tariffs illegal. Unfazed, Trump announced a fresh 10 per cent tariff under a different legal provision.

Analysts believe this move adds further uncertainty to the global trade system. In this context, they argue, Bangladesh must explore alternative routes.

As the world’s largest economy, the US is a primary export destination for many countries. Countries such as Vietnam have relied heavily on export-driven growth. However, while they export large volumes of goods to the US, the US exports far less to these countries, resulting in significant trade deficits with them.

Trump considers this imbalance to be harmful. In response, he introduced reciprocal tariffs on countries that had imposed tariffs on US products, in addition to the existing regular tariffs. Trump imposed these retaliatory tariffs on 2 April 2026. However, the rates were later revised through negotiations and separate deals with different countries. Bangladesh also signed a trade agreement with the US a few days before the 13th parliamentary election.

The plan was that whatever tariffs a country imposed on US goods, an equivalent tariff would be applied on that country’s goods. In his 2 April announcement, Trump said, “I could have done that, but it would have put many countries in a difficult situation.”

Using China as an example, he noted that China had imposed a 67 per cent tariff on US products, including currency manipulation and trade barriers, but the US would impose roughly half – 34 per cent tariff. He noted that more or less the same principle was applied to all countries, and therefore, there was no cause for alarm. At that time, an average minimum tariff of 10 per cent was applied to goods from all countries.

The straightforward answer is no. Even though imposing tariffs has not significantly boosted the US economy, Trump has made it clear that he is not stepping back from the trade war.

A few hours after the court ruling, at a press conference, Trump stated that even if it requires using laws other than the International Emergency Economic Powers Act, he would continue to impose tariffs. He announced a new global 10 per cent tariff and indicated that additional investigations would be conducted under the 1974 Trade Act concerning so-called unfair trade practices.

In Trump’s words, the court has only limited his authority under the International Emergency Economic Powers Act. Therefore, the administration still has many routes to take action on trade and tariff policy.

US Treasury Secretary Scott Bessent said the administration plans to implement new tariffs using various provisions of the 1974 Trade Act. According to the Treasury Department’s estimates, this would keep government revenue from tariffs largely unchanged in 2026. Although alternative legal routes for imposing tariffs exist, they come with limitations, such as caps on tariff rates and durations along with procedural conditions like investigations and hearings.

The Trump administration intends to use Section 122 of the 1974 Trade Act to impose a 10 per cent global tariff. Tariffs of up to 15 per cent can be imposed under this provision. However, according to the law, such tariffs can remain in effect for a maximum of 150 days.

Other legal provisions of the act would require prior investigation to prove that tariffs are necessary to protect national security or to counter unfair trade practices.

Trump has acknowledged that pursuing these new legal avenues will require additional work by the administration. However, he insists that, ultimately, the tariff policy will not be blocked. In his words, “The process is somewhat complex and will take time, but in the end, it will increase our revenue further.”

Last year, US revenue from tariffs was estimated at around USD 240 to USD 300 billion, with the majority ultimately borne by American manufacturers and consumers. If the government were required to refund this money to importers, it would involve a huge expenditure.

Studies have shown that roughly 90 per cent of the tariff costs were carried by US companies, most of which were passed on to consumers.

However, even though the question of refunds arises, it is not expected to happen anytime soon. US Supreme Court Justice Brett Kavanaugh has commented that the process of refunding would likely be quite complex. Trump, for his part, has dismissed the issue of potential refunds, stating that it is not being discussed. It is possible that this matter could be contested in court over the next few years.

The issue is that other countries had long imposed high tariffs on US goods. This practice had been ongoing for years. For example, Vietnam had imposed a 90 per cent tariff on US products. On 2 April, the United States imposed retaliatory tariffs at exactly half that rate, i.e., 45 per cent.

Bangladesh had imposed a 74 per cent tariff on US goods, and the US responded with a 37 per cent tariff. India had a 52 per cent tariff on US goods, and on 2 April, the US imposed tariffs on Indian goods at exactly half that rate, i.e., 26 per cent.

All the countries in the world had imposed high tariffs on US goods because the United States is a superpower. These high tariffs acted as a kind of levy. Exports have been the main driver of growth for developing countries, and the US was their primary export destination. But Trump refuses to accept this. He does not want to take responsibility as a superpower in that sense.

Trump is primarily a businessman, and business and trade are his main strengths. Even before 2 April, he had stated that all countries had long exploited the United States, but that day was over. On 2 April, retaliatory tariffs would be imposed on goods from all countries calling that day to be the United States’ 'Liberation Day.'

On the matter of retaliatory tariffs, economist and former director of the UNDP Human Development Report Office Selim Jahan said, “Everything Trump does is bilateral. From foreign policy to trade policy, he acts bilaterally. Through this, he is violating established systems. Now, in light of the US Supreme Court ruling, the situation has become even more uncertain. Trump will not back down. He will find various legal avenues to impose tariffs, creating uncertainty for export of goods from many developing countries to the US.”

Selim Jahan also questioned why the interim government signed a trade agreement with the US at the last moment. He believes it needs to be scrutinized carefully, as the new government is now under pressure because of this agreement. Furthermore, what happens next must also be reassessed.

In this context of uncertainty, Selim Jahan suggests that Bangladesh needs to seek alternatives. Just as India has signed a free trade agreement with the European Union, Bangladesh should consider doing something similar. Meanwhile, Bangladesh has requested a three-year extension for its LDC graduation. He questions whether, during these three years, Bangladesh will be able to address all the gaps cited in its application.

The pretext under which the United States has launched this trade war is, quite simply, unfounded. Having a trade deficit does not automatically mean something negative. Moreover, the way the Donald Trump administration presents the trade deficit is misleading. The figures cited primarily refer to trade in goods. While there is indeed a deficit in goods, they fail to mention that the United States runs a substantial surplus in services trade. It could even be said that this is deliberately overlooked for convenience.

The unspoken truth behind Trump’s tariff narrative is that in 2024 the United States’ services trade surplus rose to USD 293 billion. This surplus increased by five per cent compared to 2023 and by 25 per cent compared to 2022, according to data from the US Department of Commerce.

Furthermore, countries rely on different sectors at different stages of development, first agriculture, then industry, and ultimately services and technology as they reach the highest levels of advancement. The United States has already passed through these stages. Today, most of the technology used worldwide originates there.

China is now following a similar path. Many economists believe that India moved towards services and technology early, advancing in the services sector before fully developing its manufacturing base. Therefore, even if Trump wishes, he cannot realistically push the United States backwards.

Also, Trump’s claim that other countries have unfairly benefited at the expense of the United States is not accurate either. In 1995, Japan’s per capita GDP was 54 per cent higher than that of the United States. The situation has since reversed so dramatically that it may surprise many—by 2023, US per capita GDP was 145 per cent higher than Japan’s. In fact, the per capita GDP of Mississippi, the poorest US state, exceeds that of the United Kingdom, France and Japan. In other words, despite its sizeable trade deficit, the United States is far from being in a weak position.