US reduces reciprocal tariff on Bangladesh to 20% from 35%

The United States has decided to reduce the reciprocal tariff rate on products imported from Bangladesh to 20% from the previously declared 35%, after a series of talks over the past month.

The announcement was made by the White House last night (31 July; Washington, DC time), after the final round of the talks took place between a Bangladesh delegation and US officials in the US capital.

Earlier, Washington had informed Dhaka through an official letter that the counter-tariff would be 35%, meaning the newly declared rate has been reduced by 15 percentage points.

On 2 April, US President Donald Trump announced higher tariffs on several countries, citing trade deficit concerns. At that time, Bangladesh was subject to a 37% tariff. 

Later, on 9 April, Washington suspended the tariffs for three months, giving countries an opportunity to negotiate with the US on the matter.

The three-month deadline ended on 9 July. 

The day before, President Trump wrote to Bangladesh's interim government chief adviser, Professor Muhammad Yunus, informing him that the tariff for Bangladesh had been reduced to 35% from 37%. However, the tariffs were not enforced immediately after 9 July.

Countries were given until 31 July to reach trade agreements with the US to lower the tariff rates. 

With that deadline now passed, the new tariffs came into effect today (1 August). This means Bangladeshi exporters will now pay an average of 15% regular tariff plus an additional 20% countervailing tariff, totalling 35%, to access the US market.

According to the Export Promotion Bureau (EPB) and Bangladesh Bank, the US is the largest market for Bangladesh's RMG exports, totaling $8 billion annually. In contrast, Bangladesh imports about $2 billion worth of goods from the US.

Following the Trump administration's announcement, the Chief Adviser's Press Wing, in a statement issued this morning (1 August) said, "These agreements extend beyond tariff adjustments to include domestic policy reforms that the Trump administration views as contributing to trade imbalances. They also address broader economic and national security concerns. As part of the negotiations, countries were required to make explicit commitments to purchase US goods to help narrow trade deficits."

"Given the scope of issues involved, the negotiation process has been complex and time-consuming. Tariff relief was tied not only to reductions in duties on US exports but also to a country's willingness to address US concerns on non-tariff barriers, trade imbalances, and security matters," it added. 

"President Trump's executive order made clear that each country's tariff rate would reflect the depth of its commitment across all these areas," the statement said. 

"Bangladesh secured a 20% tariff rate, comparable to its key apparel-sector competitors such as Sri Lanka, Vietnam, Pakistan, and Indonesia, which received rates between 19% and 20%. As a result, Bangladesh's relative competitiveness in apparel exports remains unaffected. By contrast, India received a 25% tariff after failing to reach a comprehensive agreement with the US," it further said. 

"We negotiated carefully to ensure that our commitments aligned with our national interests and capacity," said Dr. Khalilur Rahman, Bangladesh's National Security Advisor and lead negotiator. 

"Protecting our apparel industry was a top priority, but we also focused our purchase commitments on US agricultural products. This supports our food security goals and fosters goodwill with US farming states" he added. 

"Today, we successfully avoided a potential 35% reciprocal tariff. That's good news for our apparel sector and the millions who depend on it. We've also preserved our global competitiveness and opened up new opportunities to access the world's largest consumer market," Rahman concluded

Last night's White House announcement also outlined tariff rates on Bangladesh's neighbours and many other countries, including Pakistan (19%), Afghanistan (15%), India (25%), Brazil (10%), Indonesia (19%), Malaysia (19%), Myanmar (40%), the Philippines (19%), Sri Lanka (20%) and Vietnam (20%).

Asian shares fall after new US tariffs

Asian shares are falling after the US slapped dozens of trading partners with steep new tariffs.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.7%.

South Korea's KOSPI tumbled 3.1% while Japan's Nikkei dropped 0.4%.

Indian refiners have stopped buying Russian oil

Indian state refiners have stopped buying Russian oil in the past week as discounts narrowed this month and Trump warned countries not to purchase oil from Moscow, industry sources said.

India, the world's third-largest oil importer, is the biggest buyer of seaborne Russian crude, a vital revenue earner for Russia as it wages war in Ukraine for a fourth year.

The country's state refiners - Indian Oil Corp IOC.NS, Hindustan Petroleum Corp HPCL.NS, Bharat Petroleum Corp BPCL.NS and Mangalore Refinery Petrochemical Ltd MRPL.NS - have not sought Russian crude in the past week or so, four sources familiar with the refiners' purchase plans told Reuters.

IOC, BPCL, HPCL, MRPL and the federal oil ministry did not immediately respond to Reuters' requests for comment.