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The new tariff order: how poor countries got played
The Trump administration’s sweeping tariff overhaul flipped decades of Untied States (US) trade policy. Tariffs—once a shield for domestic industries—were recast as instruments of pressure and punishment. While headlines focused on battles with China and the European Union, the bi
The new tariff order: how poor countries got played
MG Quibria
Published :
Aug 14, 2025 23:44
Updated :
Aug 14, 2025 23:44
The Trump administration’s sweeping tariff overhaul flipped decades of Untied States (US) trade policy. Tariffs—once a shield for domestic industries—were recast as instruments of pressure and punishment. While headlines focused on battles with China and the European Union, the bigger losers were poorer nations with the least power to fight back.
At the heart of the strategy was a “reciprocal tariff” formula: divide the US trade deficit with a country by that country’s exports to the US, halve the result, and set a 10 per cent minimum. It was simple arithmetic with skewed consequences. Smaller economies with narrow export bases were hit hardest: Cambodia 49 per cent, Laos 48 per cent, Madagascar 47 per cent, Vietnam 46 per cent, Sri Lanka 44 per cent, and Bangladesh 37 per cent. By contrast, the European Union (EU) paid 20 per cent, Israel 17 per cent, and Australia and the United Kingdom (UK) just 10 per cent.
For Bangladesh—where more than 80 per cent of exports to the US are garments—the blow was severe. Apparel tariffs, once around 15–16 per cent, were slated to rise to 37 per cent, pushing the duty on a $10 polo shirt from $1.60 to over $5, effectively pricing Bangladeshi goods out of the market. Nor did Bangladesh enjoy any preferential access: it had been excluded from the US Generalised System of Preferences (GSP) in 2013 over labor issues, the program ended for other developing countries in 2020, and in any case, US GSP law (USC 2463) excluded most textile and apparel products as “import sensitive.”
The US trade team driving this policy—Trade Representative Jamieson Greer, Treasury Secretary Scott Bessent, and Commerce Secretary Howard Lutnick—pushed for rapid bilateral deals under tight deadlines. Greer’s playbook was blunt: open with extreme demands, sidestep WTO channels to block coalitions, and link tariff relief to unrelated concessions in areas like intellectual property or agriculture where richer countries had leverage.
One tactic was particularly effective: non-disclosure agreements (NDAs). Several delegations, including Bangladesh’s, were required to sign NDAs covering all negotiation details. This enforced secrecy and isolated countries from one another, preventing them from sharing strategies or mobilising industry support. Wealthier nations sometimes refused; poorer ones, fearing exclusion from talks, often complied.
Bangladesh’s delegation was disadvantaged from the outset. Without authority to bargain across policy domains, they could only plead humanitarian and developmental cases. Their approach was reactive, shaped by US proposals rather than their own agenda. Lacking technical capacity to challenge US calculations, and barred from coordinating with fellow garment exporters, they faced Washington alone.
The final deal brought the tariff down to 20 per cent —still a third higher than before—but at a steep price. Bangladesh agreed to significantly expand imports of specific American goods, including large volumes of wheat, cotton, soybeans, dairy, meat, poultry, liquefied natural gas, and 25 Boeing aircraft, while also opening its markets more broadly to US agricultural and energy products.
The Boeing purchase provided an almost comic subplot. Bangladesh’s order was part of a global buying spree: Indonesia 50, Cambodia 20, Bahrain 12, Saudi Arabia 20 (plus 10 on option), Japan 100, and Qatar an eye-popping 260. If even half these orders materialize, they could help revive Boeing’s accident-prone fortunes, turning trade diplomacy into an informal corporate rescue plan.
For Bangladesh, the economic consequences were swift: US garment orders fell, manufacturers absorbed higher costs on razor-thin margins, and competition from free-trade partners intensified.
The inequity was glaring. The poorest nations, with the least diversified economies and weakest safety nets, bore the steepest hikes. Wealthier partners, with greater bargaining power, secured lighter terms. The logic was cold but seemed clear: squeeze those least able to retaliate while accommodating those who could hurt you.
Two major economies, however, were punished for politics rather than economics. India faced a 50 per cent tariff—25 per cent under the reciprocal formula and another 25 per cent penalty for continuing to buy Russian oil, a move opposed by Washington. Brazil also faced a 50 per cent tariff—10 per cent base plus a 40 per cent ad valorem rate—explicitly tied to its prosecution of former president Jair Bolsonaro, whom Trump called a victim of a “witch hunt.” The White House accused Brazil’s judiciary of political persecution and censorship, framing the tariff as a defense of U.S. business and free speech.
For Bangladesh and other developing economies, the lessons are sobering. Diversify exports and markets to reduce reliance on a single product or buyer. Build technical expertise in trade law, economics, and negotiation strategy. Engage early, before the stronger party defines all the terms. And even under NDA constraints, seek discreet channels to coordinate with similarly affected nations.
The new tariff order is a blunt reminder that in trade diplomacy, the rules may be multilateral—but outcomes are dictated by raw power. Appeals to fairness or development rarely prevail. Without leverage, preparation, and alliances, poorer nations will continue to be outmaneuvered—and forced to pay the highest price.
Dr MG Quibria is a development economist and former Senior Advisor at the Asian Development Bank Institute.
MG Quibria
Published :
Aug 14, 2025 23:44
Updated :
Aug 14, 2025 23:44
The Trump administration’s sweeping tariff overhaul flipped decades of Untied States (US) trade policy. Tariffs—once a shield for domestic industries—were recast as instruments of pressure and punishment. While headlines focused on battles with China and the European Union, the bigger losers were poorer nations with the least power to fight back.
At the heart of the strategy was a “reciprocal tariff” formula: divide the US trade deficit with a country by that country’s exports to the US, halve the result, and set a 10 per cent minimum. It was simple arithmetic with skewed consequences. Smaller economies with narrow export bases were hit hardest: Cambodia 49 per cent, Laos 48 per cent, Madagascar 47 per cent, Vietnam 46 per cent, Sri Lanka 44 per cent, and Bangladesh 37 per cent. By contrast, the European Union (EU) paid 20 per cent, Israel 17 per cent, and Australia and the United Kingdom (UK) just 10 per cent.
For Bangladesh—where more than 80 per cent of exports to the US are garments—the blow was severe. Apparel tariffs, once around 15–16 per cent, were slated to rise to 37 per cent, pushing the duty on a $10 polo shirt from $1.60 to over $5, effectively pricing Bangladeshi goods out of the market. Nor did Bangladesh enjoy any preferential access: it had been excluded from the US Generalised System of Preferences (GSP) in 2013 over labor issues, the program ended for other developing countries in 2020, and in any case, US GSP law (USC 2463) excluded most textile and apparel products as “import sensitive.”
The US trade team driving this policy—Trade Representative Jamieson Greer, Treasury Secretary Scott Bessent, and Commerce Secretary Howard Lutnick—pushed for rapid bilateral deals under tight deadlines. Greer’s playbook was blunt: open with extreme demands, sidestep WTO channels to block coalitions, and link tariff relief to unrelated concessions in areas like intellectual property or agriculture where richer countries had leverage.
One tactic was particularly effective: non-disclosure agreements (NDAs). Several delegations, including Bangladesh’s, were required to sign NDAs covering all negotiation details. This enforced secrecy and isolated countries from one another, preventing them from sharing strategies or mobilising industry support. Wealthier nations sometimes refused; poorer ones, fearing exclusion from talks, often complied.
Bangladesh’s delegation was disadvantaged from the outset. Without authority to bargain across policy domains, they could only plead humanitarian and developmental cases. Their approach was reactive, shaped by US proposals rather than their own agenda. Lacking technical capacity to challenge US calculations, and barred from coordinating with fellow garment exporters, they faced Washington alone.
The final deal brought the tariff down to 20 per cent —still a third higher than before—but at a steep price. Bangladesh agreed to significantly expand imports of specific American goods, including large volumes of wheat, cotton, soybeans, dairy, meat, poultry, liquefied natural gas, and 25 Boeing aircraft, while also opening its markets more broadly to US agricultural and energy products.
The Boeing purchase provided an almost comic subplot. Bangladesh’s order was part of a global buying spree: Indonesia 50, Cambodia 20, Bahrain 12, Saudi Arabia 20 (plus 10 on option), Japan 100, and Qatar an eye-popping 260. If even half these orders materialize, they could help revive Boeing’s accident-prone fortunes, turning trade diplomacy into an informal corporate rescue plan.
For Bangladesh, the economic consequences were swift: US garment orders fell, manufacturers absorbed higher costs on razor-thin margins, and competition from free-trade partners intensified.
The inequity was glaring. The poorest nations, with the least diversified economies and weakest safety nets, bore the steepest hikes. Wealthier partners, with greater bargaining power, secured lighter terms. The logic was cold but seemed clear: squeeze those least able to retaliate while accommodating those who could hurt you.
Two major economies, however, were punished for politics rather than economics. India faced a 50 per cent tariff—25 per cent under the reciprocal formula and another 25 per cent penalty for continuing to buy Russian oil, a move opposed by Washington. Brazil also faced a 50 per cent tariff—10 per cent base plus a 40 per cent ad valorem rate—explicitly tied to its prosecution of former president Jair Bolsonaro, whom Trump called a victim of a “witch hunt.” The White House accused Brazil’s judiciary of political persecution and censorship, framing the tariff as a defense of U.S. business and free speech.
For Bangladesh and other developing economies, the lessons are sobering. Diversify exports and markets to reduce reliance on a single product or buyer. Build technical expertise in trade law, economics, and negotiation strategy. Engage early, before the stronger party defines all the terms. And even under NDA constraints, seek discreet channels to coordinate with similarly affected nations.
The new tariff order is a blunt reminder that in trade diplomacy, the rules may be multilateral—but outcomes are dictated by raw power. Appeals to fairness or development rarely prevail. Without leverage, preparation, and alliances, poorer nations will continue to be outmaneuvered—and forced to pay the highest price.
Dr MG Quibria is a development economist and former Senior Advisor at the Asian Development Bank Institute.
