[🇧🇩] Trump's Victory/Tariff/ Bangladesh

[Saif]

Rehman Sobhan is an old-school Kolkata elite turned Dhaka bigwig.

I don't know if he is on RAW's payroll, but he definitely is a mover and shaker in Dhaka's influential circles and can pull strings in Dhaka.

He is a planted agent of RAW in Bangladesh. He is the guy who proposed the elimination of investment in Textile sector as it was capital intensive. He proposed importing textile from India instead.

 

[Saif]

https://www.thedailystar.net/business/news/trump-tariffs-are-they-really-reciprocal-3863881

Trump tariffs: are they really reciprocal?

The US president issued an executive order on 2 April 2025 to impose reciprocal tariffs, comprising two main actions. First, a 10 percent baseline tariff on all imports—on top of existing tariffs—effective 5 April 2025. Second, country-specific tariffs on imports from 53 targeted countries, effective 9 April. However, if more than 20% of a product's value is of US origin, only the non-US portion will be taxed. There are also exceptions—goods already in transit, items listed in Annex II (e.g., steel, aluminium, automobiles, copper, pharmaceuticals, semiconductors, lumber, critical minerals, and energy products), imports from Belarus, Cuba, North Korea, and Russia, and products from Canada and Mexico under USMCA rules. These actions signify a clear deviation from WTO's most favoured nation (MFN) principle that has been in place since the GATT came into force in 1947.

To understand the rationale behind these tariffs, one must assess the stated objectives and how the so-called "reciprocal tariffs" were determined. According to the executive order, persistent US trade deficits are largely caused by the lack of reciprocity in bilateral trade—especially via disparate tariff rates and non-tariff barriers that disadvantage US manufacturers abroad. The order highlights that the average tariff imposed by the US is considerably lower than that of the EU, India, Brazil, Vietnam, and China. Product-level comparisons show similar results. The order also blames trading partners for blocking multilateral tariff negotiations and maintaining market access barriers that limit US exports.

On 13 February 2025, prior to issuing the order, the president signed a memorandum titled "Reciprocal Trade and Tariffs," directing a review of non-reciprocal trade practices and their links to the trade deficit. The review considered tariffs imposed on US products, discriminatory taxes (like VAT), non-tariff barriers, currency manipulation, and other policies deemed harmful to US competitiveness which apparently led to the current tariff measures.

While the 10% baseline tariff appears aimed at reducing the overall trade deficit, it does not reflect any reciprocal framework. More critically, the way country-specific reciprocal tariffs are calculated raises serious questions. Supposedly, the formula used, estimates tariff rates needed to bring bilateral trade balance to zero. The proposed tariffs are in fact only half of these estimates, termed as "discounted reciprocal tariffs." This approach incorrectly assumes that trade balance is a function of tariff symmetry, ignoring factors such as comparative advantage and service trade.

For example, the US and Israel have had a free trade agreement since 1985, yet the US still runs a goods trade deficit with Israel, while enjoying a surplus in services and investment. It is implausible that Israeli trade practices amount to a 34% tariff burden on US goods. Similarly, US exports to Bangladesh face a 15% import-weighted duty, while US imports face only 3.32% average duty in Bangladesh. No known barrier specifically targets US goods, making the idea of a 74% "reciprocal tariff" on Bangladeshi exports unfounded. The so-called reciprocal tariffs are merely tools to target trade deficits, not measures to reflect actual reciprocity in trade practices.

Dr. Mostafa Abid Khan is former member of Bangladesh Trade and Tariff Commission​

 

[Saif]

https://www.thedailystar.net/business/economy/news/bangladesh-earned-tk-1500cr-tariff-us-imports-fy24-3864346

Bangladesh earned Tk 1,500cr tariff from US imports in FY24

Bangladesh generates a negligible amount of revenue from taxes levied on goods imported from the United States, according to an internal assessment by the revenue board following Washington's announcement of imposing a 37 percent reciprocal tariff on Bangladeshi products entering the US market.

In the July-March period of fiscal year (FY) 2024-25, taxes on US imports brought in just around Tk 1,000 crore -- less than 2 percent of the total revenue collected from all imports during that period.

Bangladesh imported goods worth Tk 22,168 crore from the US during those nine months, with tax receipts from those imports totalling Tk 1,010 crore, according to the National Board of Revenue (NBR).

In contrast, overall revenue from global imports reached Tk 64,439 crore during the period, according to the latest NBR report.

The scenario was similar in FY24, when tax collected from US imports amounted to Tk 1,499 crore against total revenue of Tk 100,819 crore, which was around 1.5 percent of Bangladesh's total earnings from import duties.

The country's import payments stood at Tk 702,230 crore in FY24, of which Tk 28,144 crore went to the US, reflecting only 4 percent Bangladesh's total merchandise imports, according to the Bangladesh Bank data.

In FY23, tax collected from US imports amounted to Tk 1,316 crore.

In the first nine months of the current fiscal year, Bangladesh imported more than 2,200 items from the US, but just 10 of those accounted for over Tk 500 crore in tax revenue.

Among these, motor cars faced the highest total tax incidence (TTI) at 150.76 percent, while chemical wood pulp had the lowest at 20 percent.

Bangladesh has over 7,500 tariff lines, with the highest TTI reaching as much as 1,021 percent.

In terms of value, major imports from the US included ferrous waste and scrap at Tk 202 crore, artificial filament tow of cellulose acetate at Tk 118 crore, and almonds at Tk 55 crore.

The internal NBR exercise was carried out after US President Donald Trump slapped a steep reciprocal tariff on Bangladeshi goods citing widening trade deficits.

The US government claimed Bangladesh effectively imposes a 74 percent tariff on American goods. In response, a 37 percent "discounted reciprocal tariff" will now be levied on Bangladeshi products entering the US market.

However, an NBR official, speaking on condition of anonymity, told The Daily Star yesterday that the average weighted tariff on US imports currently stands at around 3 percent.

"If we include other duties such as supplementary and regulatory duties, the average tariff would be closer to 3.5 percent," added the official.

Another senior NBR official said there is a zero-duty privilege for a number of US items, including cotton, soybeans, liquified natural gas and petroleum products.

"So, the total effective import tax on merchandise goods from the US stands below 5 percent."

According to the revenue official, as the issue centres on reducing the trade deficit with the US, they have selected nearly a dozen items on which import tariffs could be reduced.

"Even if we reduce import duties on certain US items, imports may not increase unless the private sector is willing to source items from the American market. An option could be government purchases to narrow the trade gap," he said.

Similarly, MA Razzaque, chairman of the Research and Policy Integration for Development, a local think tank, dismissed Washington's claim of a 74 percent tariff being imposed by Bangladesh on American products.

"The Trump-era reciprocal tariff formula is completely unscientific and economically irrational," the economist said. "It's methodologically flawed and fundamentally wrong."

Razzaque argued that simply lowering tariffs would not significantly boost US exports to Bangladesh.

"As the US is not a competitive player in the manufacturing sector, simply reducing tariffs won't lead to a significant increase in imports," he commented. "Under the current circumstances, it's very difficult to boost imports from the US."

Razzaque warned against making unilateral concessions. "Bangladesh has a tariff structure for all countries. If we make an exception for the US, other nations like India and Japan may demand the same preferential treatment," he said.

Asked how Bangladesh should respond, he advised initiating discussions with the US and engaging in stronger negotiations.

As of 8pm yesterday, Chief Adviser Professor Muhammad Yunus was at an emergency meeting with leading economists, advisers, and senior government officials to formulate a response.

A source who attended the meeting said the NBR is likely to recommend increasing imports of around 15 products from the US. These include plastic goods, capital machinery, generators, frozen meat, electric bulbs, and cables, among others.

Shafiqul Alam, press secretary to the chief adviser, said the meeting aimed to shape Bangladesh's position on the issue. "We'll discuss how to draft our communication and what exactly to convey to the US administration," he said.

"A positive outcome is expected from the meeting. This government is highly business-friendly. We will take steps that will not only sustain but increase our exports to the US."

Economist Zahid Hussain stated that liberalising tariffs might not lead to significant revenue loss if the reduced tariffs are applied solely on imports from the US. However, this approach could be problematic due to WTO regulations that prohibit rate discrimination based on origin. It may also lead to feelings of discrimination among European and Asian partners.

"Instead of focusing solely on US imports, we should consider revamping the entire protective tariff structure with the aim of lowering the overall nominal protection rate by 10-20 percentage points. Any resulting revenue shortfalls could be compensated through reforms in VAT and income tax."

He also pointed out that reforming non-tariff barriers, which the USTR has identified as significant obstacles to trade in Bangladesh, would not result in revenue loss.

Hussain emphasised the need for a comprehensive reform package that includes measures to reduce tariffs, para-tariffs, and non-tariff barriers.

"Such a package would be seen as a credible tool for reducing the US trade deficit with Bangladesh without diminishing our exports to the US," said Hussain, who is also a former lead economist at The World Bank.​