The 90-day pause on Donald Trump's radical restructuring of America's trade relations with the rest of the world was set to draw to a close this week, pushing trade to the top of the agenda in national conversations from Southeast Asia to Latin America. Unfortunately, even before taking office, the Trump administration boxed itself into a reductionist corner where tariffs emerged as the single-most important tool available to governments for conducting their chosen trade policy.
Trump's so-called "reciprocal" tariffs are in addition to sector-specific tariffs, which meant the effective rate on Bangladeshi apparel imports, following the announcement adding a flat 35% this week, would jump to 51% - very steep indeed compared to the previous 15%. Sectoral tariffs include 25% on cars and car parts, 50% on copper imports (from Aug. 1) and 50% on steel and aluminium, none of which Bangladesh exports. But in a televised Cabinet meeting, Trump did toy with the idea of tariffs as high as 200% on pharmaceuticals. As if to complete the weaponisation of tariffs, Trump warned on July 6 that countries "aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy."
The 35% tariff that Trump revealed for imports from Bangladesh was met with collective dismay back home, coming as it did on the back of a perceived competitor, Vietnam, clinching a vaunted trade deal. Under the terms announced by Trump, the US would charge levies ranging from 20% to 40% on goods imported from the Southeast Asian country. The upper range, specific to transhipped items manufactured in third countries, is actually aimed at limiting the entry of Chinese goods, whose manufacturers may seek to use Vietnamese ports of entry and exit to access the US market.
Bangladeshi authorities have come in for heavy criticism as either incompetent or indifferent, or both, ever since Trump's big reveal on Truth Social. Some have said businesses were kept in the dark, and that weakened Bangladesh's hand, without specifying why or how. Are there any past precedents, or current best practices, or examples that we could've sought to replicate? And are there truly any lessons for Bangladesh, from the experience of Vietnam? Addressing this first, we find that Vietnam, in exchange for its 20-40% levies, agreed to drop all import duties and other taxes on its own imports from the US. Under pressure from Trump, this drastic reduction became imperative for the nation in light of its highly trade-oriented economy, where growth has been largely export-driven. Two-way trade between the US and Vietnam in 2024 amounted to almost $150 billion, with Vietnamese exports accounting for a whopping $137 billion of that. Suddenly you realise the country you thought was your competitor, is actually way out of your league.
Having said that, the utter failure on the part of the negotiating teams that Dhaka sent, to impact US thinking at all, has stood out like a sore thumb. In such a situation, it is understandable that the public would question the need for the NSA to spend weeks on end in Washington, or to fly out the commerce adviser, even the secretary to the Ministry of Commerce, all on the public purse, and all harping on hopes of a "win-win" solution. They only serve to amplify our sense of disappointment.
