US tariff: Dhaka open to trade concessions but set to reject non-trade conditions

• Bangladesh plans to import US soybeans, oilseeds, pulses, sugar, barley
• Food ministry to import 7 lakh tonnes of US wheat yearly
• Other imports may include Boeing aircraft, LNG, military gear
• Local importers seek policy support against pricier US goods
• No US concession likely on 40% local value addition 

The government hopes to secure a significant reduction in the 35% US reciprocal tariff on Bangladeshi exports by offering duty-free access to American goods and ensuring broader trade-related facilities in line with Washington's demands, but will reject any non-trade conditions.

The decision came at an inter-ministerial meeting, lasting five and a half hours, held yesterday to coordinate efforts among nearly a dozen ministries aimed at boosting imports from the US.

A commerce ministry official present at the meeting, on the condition of anonymity,  said Vietnam's example was raised at the meeting, as it managed to cut its tariff rate from 46% to 20% by exporting $122 billion more to the US than it imported. 

"Officials believe Bangladesh could pursue a similar reduction," he said.

The official added that the government currently collects around Tk648 crore in annual revenue from tariffs on US imports. "If the US agrees to lower the proposed reciprocal tariff, Bangladesh is ready to waive these duties entirely."

However, officials believe  Bangladesh is not likely to get any concessions on the Rules of Origin requirement, which mandates 40% local value addition.

'They need time to prepare'

The meeting was attended by Commerce Adviser SK Bashir Uddin, National Security Adviser Khalilur Rahman, and Chief Adviser's Special Assistant Faiz Ahmad Taiyeb, among representatives from nearly a dozen ministries. 

Following the meeting, Commerce Secretary Mahbubur Rahman told The Business Standard that they wanted to go for negotiations very soon. "But on Wednesday, the US said not to come without a confirmed meeting time. They have meetings lined up with many countries, so they need time to prepare."

The commerce secretary said an email would be sent to the United States Trade Representative (USTR) today, requesting time for final discussions. "Bangladesh will send its final position paper to the USTR later this week."

He added that Bangladesh has already submitted its initial position paper. Inter-ministerial discussions are now ongoing to formulate further proposals. "If both sides agree during negotiations, the draft agreement will be approved by the Advisory Council and vetted by the law ministry before signing."

When asked about business leaders' concerns that the US tariff demand is unprecedented, he said: "Since 1949, the world has not seen such a reciprocal tariff arrangement. The commerce ministry has never faced this kind of situation before either. Previously, developed nations provided duty- and quota-free access to poorer countries. Now the US has introduced reciprocal tariffs for the first time."

Agri Imports, Boeing, LNG on table

Officials said the food ministry has approved plans to import more wheat, soybeans, oilseeds, pulses, sugar, and barley from the US. In line with this, the ministry signed an agreement yesterday to import 7 lakh tonnes of wheat annually from the US.

Other ministries have agreed to raise imports of Boeing aircraft, LNG, and military equipment. The US has further wants increased imports of medical equipment. 

In response, the health ministry has already gathered written feedback from doctors' associations and medical equipment importers.

As US goods are likely to be costlier than their Chinese counterparts, local importers have requested policy support to ensure competitiveness, officials said.

Easing investment barriers for US

Meanwhile, the USTR's recently released "2025 National Trade Estimate Report on Foreign Trade Barriers" criticised widespread bribery and a lack of transparency in Bangladesh's public procurement.

As a result, US companies are often excluded from government tenders. The report also cited difficulties in repatriating profits, revenues, dividends, and external payments as key barriers to private sector investment.

In addition, the US has raised concerns over Bangladesh's non-compliance with international conventions on Intellectual Property Protection (IP) and Geographical Indication (GI), making them conditions in the proposed trade deal.

At the meeting, the industries ministry argued that even many developing countries, including India, cannot fully comply with international IP standards. 

Therefore, full compliance is not currently feasible for Bangladesh. However, the government is willing to gradually improve and commit to progress.

To facilitate US participation in public procurement, it was decided to amend the Public Procurement Rules. Imports from the US will also be increased on a government-to-government (G2G) basis. 

It was also decided that measures will be introduced to ensure swift repatriation of profits, revenues, and capital for US companies operating in Bangladesh. If investors face specific obstacles, they will be resolved on a case-by-case priority basis.

The USTR report

The USTR report was released just two days before President Trump's 2 April Executive Order imposing reciprocal tariffs. Bangladesh was hit with a 37% duty, later revised to 35%, effective from 1 August.

The report mentions that corruption in Bangladesh is "very common". Although the country has introduced an e-procurement portal, US firms say outdated specifications and tenders tailored for preferred bidders block fair competition.

US companies allege that foreign competitors use local partners to manipulate the process, while instances of bid rigging, bribery, and administrative hurdles systematically disadvantage American bids. 

The USTR describes corruption in Bangladesh as "pervasive and long-standing", with anti-corruption laws poorly enforced. 

It also notes efforts to weaken safeguards in procurement rules, and reports of officials demanding bribes to approve licences and bids.

The report said the interim government has pledged reforms to ensure open, transparent tenders and paused direct negotiations pursued by the previous regime.

However, foreign investors still face delays and red tape in repatriating profits and dividends. US companies report waiting over a year for approvals. 

The USTR also raised concerns over digital trade regulations. The 2021 rules for social media and OTT platforms mandate traceability in encrypted services, prompting fears of government overreach. Civil society warns the rules could allow authorities to control content and penalise non-compliant firms.

Proposed laws on data protection and cybersecurity have similarly drawn criticism. The report also cites frequent internet shutdowns since 2015 as trade and investment barriers harming US exporters.