Why Bangladesh's tariff talks with the US were unsuccessful
Following the announcement of reciprocal tariffs on 2 April, Bangladesh swiftly responded by sending a formal request to Washington, seeking a three-month delay in implementation. Meanwhile, Vietnam proactively secured tariff-free access for its exports and initiated negotiations
Highlights
- Bangladesh failed to finalise a tariff deal with the US before the 9 July deadline
- Conflicting signals from Washington led to delays in negotiations
- Bangladesh did not provide a product list for duty-free access, as requested by the US
- The proposed US tariff agreement includes conditions that conflict with WTO rules
- Efforts to hire US lobbyists were rejected by the government despite BGMEA's request
Bangladesh's recent efforts to negotiate with the United States regarding the proposed Reciprocal Tariff Agreement have encountered significant setbacks, with Donald Trump's latest letter sent to Chief Adviser Muhammad Yunus imposing a 35% tariff now indicating sluggish progress in negotiations.
Following the announcement of reciprocal tariffs on 2 April, Bangladesh swiftly responded by sending a formal request to Washington, seeking a three-month delay in implementation. Meanwhile, Vietnam proactively secured tariff-free access for its exports and initiated negotiations.
Bangladesh, however, implemented duty-free concessions on 100 US goods in its national budget FY26 without providing a requested list of which products would benefit-hampering early momentum.
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Crucially, Bangladesh's negotiation efforts were led by Dr Khalilur Rahman, national security adviser and special envoy on the Rohingya issue, who was in Washington during key talks. However, diplomats reported receiving conflicting signals: officials suggested Bangladesh was the frontrunner in the negotiations, but later hinted that final agreement was unlikely before 9 July, undermining certainty.
Further, the US Trade Representative (USTR) informed Dhaka that the reciprocal tariff could be delayed by up to a year, according to the Ministry of Commerce. Therefore, finalising the negotiation and signing an agreement with the United States before 9 July would not resolve Bangladesh's situation. For this reason, Dhaka adopted a strategy of proceeding slowly in the negotiation process, according to the Ministry of Commerce.
For this reason, instead of presenting any attractive proposal to the United States, Dhaka asked Washington to provide a list of products on which it seeks duty-free access from Bangladesh.
Last night, the US sent a letter setting a proposed 35% tariff on Bangladeshi imports, along with the requested list and a new draft of the trade agreement.
In the last meeting, Bangladesh responded by requesting that tariffs remain below 37% if no agreement was reached by 9 July.
Washington's replied, "It may be not, since you're in negotiation", which offered little clarity.
In the 3 July meeting, Bangladesh asked that its status as an LDC (Least Developed Country) be considered, believing this should result in lower tariffs than those applied to Vietnam.
However, Dr Mostafa Abid Khan, a former member of the Bangladesh Trade and Tariff Commission, observed, "The US has never granted extra benefits to LDCs. Proposed tariff rates on Bangladesh [35%] and Myanmar [40%] are much higher than for developing countries like Vietnam [20%], China, India, Pakistan and Indonesia. It is not realistic to expect additional concessions just because we're an LDC."
Efforts by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) to hire a US-based lobbying firm through the commerce ministry were reportedly declined by the government. BGMEA former president Anwar-ul Alam Parvez told TBS, "Discussion with USTR officials alone isn't enough. That's why we urged hiring lobbyists."
Another reason behind Bangladesh's failure to succeed in negotiations with the United States is that the proposed Reciprocal Tariff Agreement by the US includes certain conditions that are inconsistent with established international trade practices and bilateral trade agreements.
The alternative proposals made by Bangladesh were not accepted by the USTR during the meeting on 26 June.
In the 3 July meeting, Bangladesh again stated that it would not be possible to comply with the conditions set by the United States, and expressed its intention to reach an agreement within the framework of WTO regulations.
Since the US later agreed to hold further meetings despite this stance, officials at the Ministry of Commerce assumed that the USTR had accepted Bangladesh's proposals.
After the tariff proposal was announced on 2 April, officials from Bangladesh's Ministry of Commerce held an online meeting with the USTR on 9 April. Subsequently, a Bangladeshi delegation met with the USTR in Washington on 21 April. At that time, the USTR agreed to discuss six specific points. Later, on 4 June, Bangladesh sent another letter to the USTR.
On 12 June, Bangladesh signed a Non-Disclosure Agreement (NDA) with the United States regarding the Reciprocal Tariff issue, under which Bangladesh agreed to sign a Reciprocal Tariff Agreement with the US.
In an online meeting held on 17 June, both sides agreed to proceed with such an agreement. The US later sent Bangladesh a draft of the proposed agreement, which is still under negotiation.
According to several sources, the draft Reciprocal Tariff Agreement from the US includes conditions requiring Bangladesh to impose trade sanctions on any country sanctioned by the US. Similarly, if the US imposes additional tariffs on a country, Bangladesh would be required to follow suit.
Additionally, one clause stipulates that Bangladesh cannot offer import concessions to any other country for products that it grants such concessions to the US. This contradicts the World Trade Organization's Most-Favoured Nation (MFN) principle.
To appease the United States, Bangladesh has taken steps to increase imports from the country, including the official purchase of Boeing aircraft, LNG, and wheat.
Last week, BGMEA President Mahmud Hasan Babu told TBS, "We are concerned about the US reciprocal tariffs. Out of this concern, we held a meeting with the US ambassador in Dhaka on Tuesday. He advised us to be more specific and more serious."
