Trump sends letter to Yunus imposing 35% tariff on Bangladeshi products
The newly imposed tarrif will be effective from 1 August
Highlights:
- Trump imposes 35% tariff on Bangladesh imports starting 1 August
- Trump threatens retaliation if countries raise tariffs on US goods
- White House insider claims Trump's tariff threats a 'theatrical show'
- Bangladesh Embassy in Washington spokesperson says tariff not final, Bangladesh-US talks are still on
- Dhaka stocks open lower amid tariff move
- Previous Bangladesh tariff rate was 15% before Trump's new move
After weeks of deliberation, US President Donald Trump has sent a letter to Chief Adviser Muhammad Yunus imposing a tariff of 35% on products imported from Bangladesh.
Trump made the announcement through a post on his social media platform Truth Social yesterday (7 July).
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In his letter, Trump cited a "longstanding and very persistent" trade deficit between the two countries and wrote, "It is a Great Honour for me to send you this letter in that it demonstrates the strength and commitment of our Trading Relationship, and the fact that the United States of America has agreed to continue working with Bangladesh, despite having a significant Trade Deficit with your great Country."
"Nevertheless, we have decided to move forward with you, but only with more balanced, and fair, TRADE. Therefore, we invite you to participate in the extraordinary Economy of the United States, the Number One Market in the World, by far," the letter read.
Trump further said, "We have had years to discuss our Trading Relationship with Bangladesh, and have concluded that we must move away from these longterm, and very persistent, Trade Deficits engendered by Bangladesh's Tariff, and Non Tariff, Policies and Trade Barriers. Our relationship has been, unfortunately, not Reciprocal."
Trump's new 35% tariff announced for Bangladesh is 2% lower than the initial rate announced three months ago, but significantly higher than its close rival Vietnam (in the field of RMG), which recently secured a trade deal with the US under which its goods will be charged a tariff of 20%.
'Tariff not final, Bangladesh-US talks are on'
Meanwhile, Golam Mortoza, press minister at the Bangladesh Embassy in Washington, DC, said the 35% tariff imposed on Bangladesh by the US is not a final decision as the discussions are still ongoing.
"Bangladesh is making its utmost effort for a positive outcome, and that possibility is not over yet," Mortoza wrote in a post on Facebook today (8 July).
He said the next round of talks is scheduled for 9 July.
Even in Trump's letter, he wrote, "If you wish to open your heretofore closed Trading Markets to the United States, and eliminate your Tariff and Non Tariff, Policies and Trade Barriers, we will, perhaps, consider an adjustment to this letter."
Commerce Secretary Mahbubur Rahman said a meeting has been scheduled this afternoon between Bangladesh and the US regarding the newly imposed 35% tariff on the import of Bangladeshi products.
He said Commerce Adviser Sheikh Bashir Uddin will join the meeting physically in the US, while the trade secretary will join virtually.
Talking to The Business Standard this morning, the commerce secretary said that along with the letter imposing the 35% tariff, the United States has sent a new set of documents for an agreement.
When asked what those documents contain, he said, "It's quite a large document, and I haven't had the chance to read it fully yet. We'll have to see later what they are asking for and how much they are willing to review if an agreement is made."
Dhaka stocks open lower
Following Trump's announcement, the Dhaka Stock Exchange (DSE) opened on a cautious note today, with stocks trading slightly lower in the first 40 minutes of the session.
The DSEX, the benchmark index of the DSE, initially dipped in the first five minutes of trading before briefly rebounding into positive territory.
However, by 10:40am, the index was down 10 points at 4,966.
Meanwhile, the blue-chip index DS30 shed 5 points, settling at 1,867.
Among the traded issues, 118 advanced, 176 declined, and 84 remained unchanged.
Other countries getting Trump's tariffs
Trump sent letters to the heads of 14 countries imposing tariffs on their exports to the US, which would be effective from 1 August.
Posting the letters addressed to the leaders of the respective countries on his social media platform, Trump imposed a 25% levy on imports from both Japan and South Korea.
In his letters to Japan and South Korea – two of the closest allies in Asia for the US – Trump cited long-standing trade imbalance with the countries as the reason behind 25% tariffs.
In each of his 14 letters, Trump warned against any retaliatory tariffs, threatening reciprocation from the US.
"If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by will be added onto the tariffs that we charge," Trump wrote.
Full list of tariffs imposed on 14 countries:
- Myanmar: 40%
- Laos: 40%
- Cambodia: 36%
- Bangladesh: 35%
- Serbia: 35%
- Indonesia: 32%
- Bosnia: 30%
- South Africa: 30%
- Tunisia: 25%
- Malaysia: 25%
- Kazakhstan: 25%
- South Korea: 25%
- Japan: 25%
- Thailand: 36%
Meanwhile, on Wednesday, Trump announced that the US will impose 20% tariffs on imports from Vietnam under a new trade agreement the two countries have reached.
So far, the US has reached trade deals with only two nations, the United Kingdom and Vietnam, as well as a partial deal with China. A deal with India is said to be close.
The deal with Vietnam is seen as significant for Bangladesh, as it is a direct competitor in the lucrative RMG market.
The 20% tariffs the US will charge on imports from Vietnam is significantly lower than the 46% announced earlier, which was set to go into effect from 9 July, at the end of a 90-day pause that Trump had announced to his original announcement of 'reciprocal tariffs' on almost every country around the world that the US trades with.
In order to secure that large reduction from 46% to 20% though, Trump said Vietnam agreed to charge no tariffs at all, on US products. In the 2023-24 fiscal, Bangladesh's tariffs on imports from the US earned government revenues of almost Tk 1500 crore, according to official figures.
The AP reports that following a now well-worn pattern, Trump plans to continue sharing the letters sent to his counterparts on social media and then mail them the documents, a stark departure from the more formal practices of all his predecessors when negotiating trade agreements.
The letters are not agreed-to settlements but Trump's own choice on rates, a sign that the closed-door talks with foreign delegations failed to produce satisfactory results for either side, according to AP.
A tariff is an import tax or duty that is imposed on imported goods, payable by the importer. By increasing the cost of imported goods, they are meant to make them less competitive in the importing country's market.
If the importers, in this case, US buyers of Bangladeshi RMG, are unwilling to bear the extra cost, the exporters, i.e., Bangladeshi RMG firms, would have to reduce their prices to retain competitiveness.
Prior to Trump taking office, Bangladeshi imports into the US were subject to an average tariff of 15%.
'It's all fake': claims White House insider tells Politico
"Trump knows the most interesting part of his presidency is the tariff conversation," a person close to the White House, familiar with the trade talks and granted anonymity to discuss sensitive negotiations, told Politico. "I find it hard to believe he's going to surrender it that easily. It's all fake. There's no deadline. It's a self-imposed landmark in this theatrical show, and that's where we are."
Trump's Wednesday announcement of an initial trade agreement with Vietnam was a case in point: While Trump took to Truth Social to announce new tariff rates for the country, draft language of a statement set to be released by the US and Vietnam underscores that the deal remains a work in progress.
Since announcing his plans for an historic escalation of US tariffs at a Rose Garden event on April 2 — what the White House hailed as "Liberation Day" — Trump has attempted to have it both ways on trade deals.
His administration appears fully committed to tariffs, maintaining a baseline 10 percent duty on nearly every trading partner. He also imposed higher levies on certain sectors, like automobile and auto parts imports, with more to come, under the auspices of reshoring business, protecting national security and raising new revenue.
In the meantime, his trio of trade negotiators — Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer — have embarked on a mad sprint to secure multiple deals with foreign governments, without authority to significantly lower the new barriers, says Politico.
The result has been a convoluted process with little progress and no end in sight. Countries have sent representatives to the US on repeated visits to negotiate, but some have failed to secure meetings. Those who have secured facetime with Trump officials have sometimes left confused about US demands or have been later seen their countries chastised by Trump on social media.
Even as Tuesday's deadline approaches, the White House and Trump's top lieutenants are sending conflicting messages about how much the deadline matters. Both Bessent and National Economic Council Director Kevin Hassett were spreading the word on Capitol Hill and in television appearances that Trump would likely extend the deadline, even as Trump himself ruled out such a possibility. "I think we could have trade wrapped up by Labor Day," Bessent told Fox Business's Maria Bartiromo last week.
White House aides privately stress that Trump is serious about the tariff deadline and making deals. They do acknowledge, however, that notching a deal with a country now that they see as aimed at correcting trade imbalances doesn't preclude the president from slapping tariffs on a country in the future over non-trade related issues, like he did with fentanyl tariffs on Canada, Mexico and China.
"To assume that he sees this as a game — he's the president of the United States. He understands what's at stake here. He's not willy-nilly trying to sow economic discord just for TV ratings," said one White House official, granted anonymity to share the president's thinking. "He understands what he's doing here, and there's very clear goals that have been outlined."
