The future of US-Bangladesh trade
AL MAMOON
Published :
Apr 06, 2025 15:28
Updated :
Apr 06, 2025 15:32
All hell broke loose at Rose Garden on Apr 2 as President Donald Trump unveiled new tariff structure for US trade partners all around the world sparing only 11 countries that includes Russia and North Korea. With new trade regime US aims to topple the age of globalisation- headlined Wall Street Journal on their coverage of the chaotic Wednesday announcement. Indeed, it is, if the new rates come into play next Wednesday this would be a reversal for human history. It was the painstaking rounds of trade talks in the 80 years after the Second World War that lowered tariffs and led to unprecedented global prosperity, including for America (Zanny M Beddoes, Editor-in-chief, Economist).
The new numbers
The new tariff plan has two levels of levies. First, there will be a 10 per cent tariff on all imported goods across the table (US ports have started collecting it from Apr 5, breaking WTO framework). On top of that there is another double-digit tariff for about 60 countries who sell more to America than they buy from. This second layer of protectionism has erupted debate more than the first as it questions the very fundamentals of trade.
Here is the deal. The difference between goods coming into US and goods going out is divided by the former and then one half of the percentile is slapped as reciprocal tariff. For instance, in 2024 we sold $8.36 million dollar worth of goods and services while imported only $2.21. If the differential $6.15 million is divided by $8.36, one gets 74 per cent. United States Trade Representative (USTR) named it as tariffs charged to US and slapped one half of it (37 per cent) as a generous reciprocal tax. By the same formula some hardest-hit ones are Cambodia (49 per cent), Laos (48 per cent) and Vietnam (46 per cent) and Sri Lanka (44 per cent).
China secures third position in the list of United States’ trade partners only after Mexico and Canada but still could not bend it their way. Against a $143 billion import from US they sent $438.95 billion in 2024. That is a deficit of $295.4 billion. By the new flawed formula tariff slapped on China is 34 per cent. China however has reacted sharply and as this newspaper ran, has slapped back the same rate on China-bound American products.
The rationale behind
The philosophy behind this dubious calculation was the highlight of the 53-minute Liberation Day speech of the president on the White House lawn. He fuelled the ‘Made in America’ slogan and fired the sweeping new duties. Trump accused America’s trading partners of undermining the United States for decades, saying they have engaged in unfair trade practices to steal the country’s wealth and enrich their own economies (Ana Swanson, New York Times).
The unprecedented escalation of tariffs is sure to impact all countries, far and near in manifold ways. On the flip side, Americans will also face price escalation when they go to shop. Groceries, clothing, shoes, electronics - prices of nearly everything will drive up as soon as next week. America does not produce coffee, bananas, or lobster. It imports them. American giants like Nike, Ralph Lauren, Levi Strauss or H&M sources from countries like ours. In the new trade regime, the quality of our products will remain the same bringing us the same dollar amount while the prices skyrocket. This will bleed American people, but the government will bag more money in the borders. The president has a sweetener for this. He equates trade with tax. He thinks, the more America earns from trade the less the citizens need to pay as income tax. There is a 39.5 per cent tax bracket for high earners which can be removed permanently and 37 can stay as interim top and pave the way for further tax cuts.
Trump administration believes, as a mid-term effect companies will come crawling to set up plants in America and fairness will be restored as what has happened since Second World War in the name of global trade has ripped off America.
The silver lining
Some of Trump’s towering rates are imposed on our rivals in the ready-made-garment industry. It is a sigh of relief that we are not being targeted here, it is rather a wholesale action with possible repercussions from all corners of the world.
Second biggest thing is the fragile framing of the whole scheme. The cockamamie calculation is based on the deficit. If the gap narrows, the rates shrink with it, if at some point it is even then there would be no added tariff burden at all. We can work on that right from now.
This week US stock markets suffered their steepest declines since 2020 on fears Trump administration’s heightened tariffs will trigger a trade war globally and eventually drag the US economy into recession.
Our actions and reactions
We as one of the fast-growing trade partners of US (50th out of 233 countries and territories) cannot sit and wait for others to act. No other than the Chief Advisor has met with advisors and trade leaders on Apr 4. That is an excellent headway. Here is our six-point proposition of how we may navigate through in the coming weeks and months:
What we should aim at is more trade with America, not the other way round.
The writer is a former commercial counselor at the Los Angeles Consulate
Bangladesh Defense
