Written by The Banking Post
Dhaka, July 12 — As President Trump’s “tariff letters” loom over 22 trading partners, Bangladesh finds itself under pressure to deliver swift, substantive trade reforms or face punitive duties of up to 50 percent on its exports to the United States.
Highlights
- Trump’s letters impose a 35 percent default tariff on all Bangladeshi goods from August 1.
- Bangladesh’s piecemeal tariff cuts and symbolic gestures fell short of USTR demands.
- Geopolitical levers—including “mirror” tariff clauses and origin‐rule scrutiny—amplify the pressure.
Bangladesh was given a 90-day window following the April 2 announcement to reduce its own tariffs and other trade barriers. Yet by July 10, Dhaka’s modest cuts and promises to buy U.S. wheat, cotton and aircraft had not moved the needle in Washington. Instead, the U.S. threatened a 35 percent duty on every product Bangladesh ships to American shores, plus an additional levy if Dhaka raises its own tariffs.
In contrast, Vietnam secured a 26-point cut in its April 2 rate during the same pause, while Sri Lanka and Cambodia each won two-digit concessions. Analysts point to Bangladesh’s failure to comprehensively address issues cited in the U.S. Trade Representative’s 2025 National Trade Estimate—ranging from non-tariff barriers and public-procurement bias to labor‐rights compliance and foreign‐investment caps.
“The tariff letter is a geopolitical instrument as much as an economic one,” said a Dhaka‐based trade specialist. “Bangladesh’s reliance on Chinese inputs exposes it to origin‐rule challenges that could trigger even higher duties, and the ‘mirror’ condition forces Dhaka to match U.S. sanctions elsewhere—an infringement on our sovereignty.”
Under proposed U.S. origin rules, materials sourced from China would no longer qualify Bangladesh goods for preferential treatment. That jeopardizes the country’s ready‐made garment (RMG) and footwear exports, which rely heavily on Chinese fabrics and accessories. Any shift to regional inputs—say, from India or Vietnam—could upend existing supply chains and inflate production costs.
Key details of the U.S. “35 percent supplemental tariff” remain opaque. Washington has not clarified value-addition thresholds or regional cumulation flexibilities. Until the fine print is released, exporters—and American buyers—are left guessing whether they can avoid the new levies through tariff engineering or rerouting goods via third countries.
A recent Budget Lab analysis warns that passing the full tariff to U.S. consumers could lift prices by roughly 37 percent on apparel and 39 percent on leather products. Whether end-users absorb the increase or shift to alternative suppliers will determine the ultimate hit to Bangladesh’s export earnings, especially amid forecasts for a slowdown in U.S. consumer spending in FY 2026.
With August 1 fast approaching, government negotiators are scrambling for clarity—and leverage. Some officials hope a more robust reform package, backed by clear timelines on tariff cuts, might yet persuade Washington to back off. But with U.S. trade policy still defined by unpredictability, Dhaka’s path forward remains as rocky as ever.
