Beyond tariffs: The complex reality of US demands

Illustration: TBS

After frantic efforts to reach an agreement with the US on reducing tariffs on exports from Bangladesh, the ball is now in the court of the United States. All we can do is wait until the third round of discussions between the US and Bangladesh comes to an end. Nonetheless, our government remains hopeful that the final outcome will be zero tariffs instead of the proposed 35%.  

At present, tariffs no longer appear to be the core issue; instead, non-tariff and non-trade issues—entangled with political and economic concerns—have taken centre stage. Bangladesh signed a Non-Disclosure Agreement (NDA) on 12 June, which has been criticised for encouraging opacity and discouraging business participation. In contrast, negotiation terms in other countries remain more transparent.  

Meanwhile, several countries have concluded agreements. A joint statement outlining the framework for a US–Indonesia reciprocal tariff agreement appeared on the White House website under "briefings and statements." The two-page document includes numerous conditions attached to the reduction of a 19% reciprocal duty on Indonesia. 

Despite Indonesia maintaining a trade deficit of $17.9 billion with the US, the agreement demands a long list of commitments: rules of origin negotiations, addressing non-tariff barriers, removing local content requirements, recognising US-issued certificates, exempting certain products from regulatory requirements, lifting import restrictions, implementing good regulatory practices, and waiving licencing requirements on selected US goods.

Additional stipulations include removing barriers to digital trade, services and investment; allowing the transfer of personal data to the US; supporting a permanent moratorium on customs duties for electronic transmissions at the WTO; implementing the joint initiative on services domestic regulations; and submitting revised specific commitments for WTO certification. 

Labour law amendments, high levels of environmental protection, forest sector governance, implementing WTO fisheries subsidies agreements, and lifting restrictions on the export of critical industrial minerals are also among the conditions. Security cooperation to enhance supply chain resilience and commitments to commercial deals—such as aircraft procurement and the purchase of agricultural and energy products—are also mentioned. Only after these are addressed will the two countries finalise the reciprocal tariff agreement.

This list of conditions appears extensive and challenging, requiring several years for any country to comply. Bangladesh is in the process and has already committed to importing various items—sometimes even at higher prices—to maintain its business relationship with the US.

However, what began as a conversation limited to trade deficits has now expanded to a wide range of issues, including security, licencing, raw material sourcing, bilateral partnerships, and other trade and non-trade concerns. The trade deficit between the US and Bangladesh is not particularly large—just $6.6 billion in goods. 

In terms of services, the deficit is even smaller, at $354 million (2023–24). Curiously, the reciprocal tariff agenda strategically avoids services, where the US enjoys a surplus and has a large, competitive market.

The Government of Bangladesh is preparing its final position paper for the USTR, including proposals to increase imports of soybeans, oilseeds, pulses, sugar, barley, Boeing aircraft, LNG, and military equipment from the US. 

Bangladesh has also signed a Memorandum of Understanding (MoU) to import 700,000 metric tonnes of wheat annually from the US for the next five years under a social safety net (SSN) programme. According to the MoU, signed on 20 July 2025 between the Ministry of Food and the US Wheat Association, the government will procure high-quality wheat at competitive prices.

In response to US demands to increase imports of medical devices and pharmaceuticals, the government is assessing domestic market sentiment and feasibility. Bangladesh has already reduced import duties on several items as part of the Chief Adviser's commitments to the US.

The National Board of Revenue (NBR) has issued several Statutory Regulatory Orders (SROs) reducing import duties on certain US-origin items. However, this may place Bangladesh in a difficult position, as these goods are often more expensive than their Chinese counterparts. 

For example, import duties on five items under the semiconductor category (8-digit HS Code) have been reduced to 1% from previous rates of 5–10%. Duty on gas turbines has also been cut as a measure to help reduce the trade deficit.

Bangladesh typically imports common-protein wheat from Russia–Ukraine, Bulgaria, Romania, and Brazil, and high-protein wheat from Canada and Australia at prices ranging from $300 to $313 per tonne. While US wheat may be slightly more expensive, data from the US Department of Agriculture (as of 9 July 2025) shows the price of US wheat at $233 per tonne. In such a case, Bangladeshi importers may request additional support to source from the US, as they already have established trade relationships with alternative countries.

Bangladesh is evidently willing to accept the risks of increasing imports from the US, even at higher costs, in the interest of long-term trade relations. These efforts have been communicated to the US government. 

However, uncertainty remains about whether the increased tariffs will take effect from 1 August 2025 or whether final negotiations will delay their imposition. This uncertainty has created anxiety among businesses, with many facing potential contract discontinuation and setbacks in job retention within the export sector.

Like other countries, Bangladesh must continue refining its policies to address its trade deficit with the US. The government has identified eight key (mostly agricultural) products for increased imports. Since these items are currently sourced from other countries, shifting to US imports is possible—provided prices remain competitive under Most-Favoured Nation (MFN) treatment. 

Nevertheless, the potential impact on government revenue must be carefully assessed.

Some experts have noted that the US has increased tariffs on exports from several countries that compete with Bangladesh in the RMG (ready-made garments) sector. These countries may shift towards high-value-added products. Bangladesh, with its strength in low-value RMG, could retain its current market segment while gradually attempting to move up the value chain. 

Experts also suggest that the existing Trade and Investment Cooperation Framework Agreement (TICFA) with the US could be leveraged to address broader issues. Tariff lines with zero current import volumes should be reviewed and reduced to zero duty, helping to reduce the overall tariff burden without harming domestic industries.

The USTR has repeatedly raised the issue of Intellectual Property Rights (IPR). Bangladesh has already taken steps to update its IPR laws—such as those related to trademarks and Geographical Indications—which could be communicated to the US side. Additionally, Bangladesh is reviewing its Public Procurement Act of 2006 and its related rules, which may also be conveyed.

While Bangladesh's service export deficit remains small, enhancing competitiveness in this sector could be a strategic goal. A collective effort among WTO member states is needed to address these matters in a WTO-compliant manner. 

Sketch: TBS

Ferdaus Ara Begum is the CEO of BUILD, a Public Private Dialogue (PPD) platform that works for private sector development. 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard