US tariff policy and the challenges we face

Economic, political and diplomatic relations have become deeply interlinked in today's international trade. The United States is one of the most prominent of the influential players in global trade. It shapes the course of the global economy not only through tariff rates or trade agreements, but also via geopolitical strategies and the exercise of influence.

However, this US influence does not always reflect economic realities; it is also driven by political priorities, strategic alliances, and the complex equations of bilateral relations.

An analysis published in the Indian daily 'The Hindu' found that US tariff policies are not always based on trade deficits. Political preferences and diplomatic priorities often have a greater impact.

In this reality, emerging economies like Bangladesh face a new set of challenges. Discriminatory US tariff policies, Bangladesh’s relative position compared to India, and strategies for future trade, all these issues require contemporary analysis.

In 2024, the United States had a trade deficit of about USD 49.5 billion with India. By contrast, its deficit was much higher with several other countries: USD 175.9 billion with Mexico, USD 129.4 billion with Vietnam, USD 87.9 billion with Germany, USD 87.2 billion with Ireland, USD 76.4 billion with Taiwan, USD 72.3 billion with Japan, and USD 69.9 billion with South Korea. In other words, the US deficit with these countries is far greater than with India.

Yet, the US had been imposing a 25 per cent tariff on Indian goods, which Donald Trump later increased by another 25 per cent. As a result, U.S. tariffs on Indian products now stand at 50 per cent. For many of the countries listed above, the tariff rate is much lower. Only China (30 per cent) and Canada (35 per cent) are subject to comparably high rates. This demonstrates that, in the case of countries like India and Bangladesh, political and strategic considerations weigh more heavily than economic realities.

Donald Trump recently criticised India for being one of the largest buyers of Russian crude oil, even though during the Ukraine-Russia war, Europe was in fact Russia’s biggest energy importer. According to international media reports:
• 51 per cent of Russia’s LNG exports went to Europe
• 37 per cent of its pipeline gas went to Europe
• 47 per cent of its crude oil went to China, 38 per cent to India, and only 6 per cent to Europe and Turkey

This shows that tariff imposition is often politically motivated. In India’s case, despite high tariffs, its exports to the US market have not been hindered. On the contrary, bilateral ties have deepened in defence, technology and strategic cooperation.

The US has a trade deficit of about USD 6 billion with Bangladesh. By contrast, its deficit with Vietnam is around USD 125 billion, that is, 20 times higher than with Bangladesh. Yet, US tariffs on Vietnamese goods are 20 per cent, while tariffs on Bangladeshi goods had been 35 to 37 per cent. This reflects geopolitical realities rather than the scale of economic deficits.
Under the US’ new reciprocal tariff policy, higher tariffs are supposed to be imposed on countries with larger deficits. But despite Bangladesh’s smaller deficit, it was initially subjected to higher tariffs, which was an obvious disparity.

Bangladesh decided to increase imports of US agricultural products (wheat, soybean and cotton), LNG and military equipment, and signed a deal to purchase 25 Boeing aircraft. It also agreed to import 700,000 tonnes of wheat over five years.

As a result, from August 2025, the US has reduced tariffs on Bangladeshi goods to 20 per cent, which will provide a competitive advantage for the readymade garment industry.

Once Bangladesh graduates from LDC status, it will no longer enjoy duty-free benefits. This will make access to the US market more expensive and intensify competition. Exporters have already suffered from the suspension of GSP benefits. If tariffs rise further in the future, the garment and leather industries could face significant setbacks.

The question is, does the US set tariffs solely on the basis of trade deficits, or are geopolitical calculations more important? Lower tariffs for countries like Vietnam or Japan despite large deficits, higher tariffs for a country like India, and higher tariffs for Bangladesh despite its relatively smaller deficit, all indicate that political factors are at work behind the economics.

The lesson for Bangladesh is that trade is no longer just an economic matter; diplomatic relations, defence agreements, technological cooperation, and political alignments are shaping tariff policy. This means Bangladesh needs farsighted strategies, commercial acumen and an active presence in international forums.

In this situation, we must focus on several priorities. First, reduce dependence on the US and Europe by creating new markets in Southeast Asia, Africa and the Middle East. We must also strengthen economic diplomacy and, if necessary, initiate fresh negotiations under TIFA.
We must prepare to challenge discriminatory tariffs at the World Trade Organization. Advanced technology, sustainable production, support for small and medium enterprises, and harnessing young talent must be put to use.

* MM Mahbub Hasan is a banker, development researcher and writer. He can be contacted at [email protected]