None saw it coming: What went wrong in Bangladesh’s tariff negotiation with US 

Infograph: Duniya Jahan/TBS

• Dhaka delayed action after conflicting signals from Washington
• Officials expected tariff deadline pushed by one year
• It was believed deal before 9 July unlikely
• Dhaka cited LDC status in negotiations, but US never favoured LDCs
• BGMEA urged hiring Trump-linked lobbyist, govt declined

Donald Trump's latest letter to Chief Adviser Muhammad Yunus imposing a 35% tariff on Bangladeshi goods has caught government officials and exporters off guard, exposing misplaced expectations that Dhaka had more time.

Adding to the setback, the government sidelined the private sector throughout negotiations, ignoring repeated calls to engage lobbyists to bolster Bangladesh's position. Officials also anticipated a more favourable agreement based on Bangladesh's Least Developed Country (LDC) status.

However, none of these expectations materialised, and Bangladesh now faces a 35% tariff – far more than its competitors. 

Despite this, Bangladesh should have been better positioned, as it promptly responded to the April 2 announcement of reciprocal tariffs by formally requesting a three-month delay in implementation.

Infograph: Duniya Jahan/TBS

Vietnam – Bangladesh's chief competitor – quickly offered duty-free access to all US products and launched its negotiations. Bangladesh also granted duty-free access to 100 US goods in the FY26 budget but failed to submit the list of items requested by the US before the budget was passed.

Bangladesh's negotiation efforts were led by Khalilur Rahman, national security adviser and special envoy on the Rohingya issue, who was in Washington during key talks. 

However, diplomats in Washington reported receiving conflicting signals: government officials suggested Bangladesh was the frontrunner in the negotiations, but later hinted that final agreement was unlikely before 9 July, undermining certainty.

Besides, 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 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.

As a result, instead of presenting any attractive proposal to the US, Dhaka asked Washington to provide a list of products on which it seeks duty-free access from Bangladesh. 

Now, the latest US letter comes with the requested list and a new draft of the trade agreement.

LDC argument falls flat

In the last meeting, Bangladesh responded by requesting that tariffs remain below 37% if no agreement was reached by 9 July. 

Washington replied, "It may be not, since you're in negotiation", offering 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. 

After the meeting, Commerce Secretary Mahbubur Rahman, who joined the talks online from Bangladesh, told TBS over the phone that fruitful negotiations had taken place regarding reciprocal tariffs. 

Although no final decision has been reached yet, he expressed confidence that Bangladesh would receive tariff concessions.

However, Mostafa Abid Khan, 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."

Exporters not engaged

A proposal by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) to hire a US-based lobbying firm through the commerce ministry was 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."

In fact, trade leaders say they were ignored throughout the entire process and kept in the dark, despite driving over 80% of Bangladesh's exports and imports. During the critical 90-day window when the interim government negotiated with the US, the private sector was completely excluded.

"We were totally excluded from the government's negotiations with the US. We didn't know how they were preparing or what position they were taking," said Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

What shocked him most was the absence of trade experts in the negotiation process.

US draft seen as violating trade norms

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.

Timeline of talks

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."