In the wake of US President Donald Trump's announcement of a 35% tariff on July 7 on Bangladeshi exports to the US market, the three-day negotiation between the two countries over the issue ended on Saturday with no sign of resolving the impasse.
This is clear when a press release issued by the Chief Adviser's office on the same day confirmed that several issues remained unresolved. But hope is still there as both nations have agreed to continue inter-ministerial discussions and the next meeting time and date will be decided very shortly.
This is why Dhaka pins hope on the third round of talks for a positive outcome in favour of Bangladesh. This was enunciated by the participants in the second round talks-- Trade Advisor Sheikh Bashir Uddin and National Security Advisor Dr Khalilur Rahman.
In fact, this US action in the form of announcing new tariff takes place because Trump government wants to reduce trade deficit with Bangladesh which was registered in 2024 at $6.2 billion with US imports amounting to $8.4 billion and its exports to Bangladesh accounting for $2.2 billion.
So, in order to bridge the deficit gap, US government is trying to export aircraft, more cotton, food grains, LNG, military equipment and other products to Bangladesh.
Accordingly, the Bangladesh interim government has taken some initiatives to purchase aircraft and wheat from the developed nations most importantly from the United States and urged the local traders to import more items, including cotton and wheat from the US.
On the export front, the US is Bangladesh's largest single-country export destination, accounting for 17.09 per cent of total exports in FY 2023-24.
Bangladesh mostly exports ready-made garments to the US market accounting for roughly 20% of our total apparel exports. If the US new tariff takes effect from August 1, as announced, our garment industry will suffer most. With no free trade agreement in place, the new tariff is surely to make our RMG less competitive in the US market that may prompt US buyers to look for other markets.
In this case, Vietnam will be a beneficiary country. This is because the US is set to charge 20% tariffs on imports from Vietnam under a new deal that is significantly lower than the 46% announced earlier and it is going to go into effect from July 9 after the end of a 90-day pause. As Vietnam is a direct competitor of Bangladesh in the lucrative US RMG market, the new deal with reduced tariff with Vietnam will make its goods less competitive than Bangladesh's.
Consequently, in Bangladesh, some garment factories will face closures that will create unemployment mostly women in the country. Not only that, supporting industries like transport, logistics and many small and medium size enterprises will also be affected in the coming years.
We are still left hoping that the next round of negotiation expected very soon over the US tariff issue will yield some positive results in favour of Bangladesh.
