Beyond tariffs: The geopolitics of the US-Bangladesh trade negotiations

Illustration: TBS

President Donald Trump pursued an "America First" trade agenda to reduce US trade deficits, and thereby to make America great. In the long run, whether the implementation of this agenda will bring positive outcomes for its economy is debatable. 

In fact, there is a strong focus on reducing US trade deficits, especially with countries which have a rapidly growing trade surplus with the US. Against this backdrop, on 2 April 2025, the Trump administration announced reciprocal tariffs on many trading partners, including Bangladesh, due to their large trade surplus. The fact is that the administration imposed a "37% to 50% reciprocal tariff" on several countries' (e.g., Cambodia, Bangladesh, Thailand, Vietnam) exports, especially targeting garments, following the "Liberation Day" order.

Almost all heads of state/government of the trading partners (including Bangladesh) appealed via letters and diplomatic channels for a delay of one to three months to allow for meaningful talks. The US then paused implementation for 90 days, allowing room for negotiations. Bangladesh faced a sharp increase on its exports to 37%, potentially rising to 50% for garment exports. Prior to the US-Bangladesh negotiations, average tariffs stood at around 15–16%.

Bangladesh and the United States engaged in trade negotiations to address tariff barriers, improve market access, and strengthen strategic ties. While both sides aimed for a constructive dialogue, challenges such as geopolitical tensions and labour rights issues complicated the talks. Despite these obstacles, opportunities exist for a limited trade agreement that could boost Bangladesh's garment exports in particular while addressing US geopolitical issues.

Who gains what

The tariff negotiation is a "reciprocal trade agreement" where both countries make concessions to address trade imbalances and geopolitical concerns. Apparently, it reveals that the resulting agreement through the negotiation includes tariff and trade concessions and imports of US products to reduce US trade deficits. The Bangladeshi government agreed to give duty-free access for over 600 US products (wheat, cotton, soy, aircraft, and LNG products) in exchange for tariff concessions. On 20 July, Dhaka signed a Memorandum of Understanding (MoU) to import 700,000 tonnes of US wheat annually over five years, and immediately approved a deal for 220,000 tonnes to signal commitment. Bangladesh also committed to high-profile purchases (e.g., 25 Boeing aircraft). Although whether Bangladesh Airlines (Biman) needs them at the moment is a different question, such purchase commitments are a bargaining chip to ease US concerns over the trade imbalance.

As of 1 August 2025, Bangladesh negotiated a reduction to a 20% tariff on its garment exports—down from the initially proposed 37–50% range. Bangladesh's ready-made garment (RMG) sector accounts for over 80% of its export earnings and employs over four million people. Bangladesh's overreliance on garments remains a core vulnerability. In fiscal year 2024–25, the US imported approximately $8.69 billion worth of goods from Bangladesh—about 18–20% of its total exports.

This trade agreement was achieved through a comprehensive negotiation process. Bangladesh's tariff negotiations were stressful and fraught with geopolitical complexity—but ultimately mitigated via trade-offs and diplomatic leverage.

The negotiations beyond trade to geopolitical matters

The negotiations between Bangladesh and the Trump administration on tariffs were not solely about trade imbalances. The Trump administration used the tariff negotiations as a tool to advance a broader strategic agenda, linking market access for Bangladesh's crucial apparel industry to concessions on geopolitical issues, some of which extend beyond trade. 

The US expressed its concern about the Indo-Pacific region's (including Bangladesh and Cambodia) growing ties with China. As part of the deal, Bangladesh might have been asked to reduce its imports from China and increase its imports from the US. This includes a commitment to purchase American military and civilian aircraft, as well as energy and agricultural products.

Moreover, Bangladesh's prior reluctance to sign the General Security of Military Information Agreement (GSOMIA) and the Acquisition Cross-Servicing Agreement (ACSA) was a source of tension with the US, whereas these agreements (a kind of military cooperation) are seen by the US as essential for strengthening the economic relationship.

During the tariff negotiations, the Trump administration used the current negotiation as a tool to advance a broader strategic agenda and gain concessions on geopolitical issues. In this regard, a key aspect of the negotiations was a Non-Disclosure Agreement (NDA).

An NDA is a contract between two parties to protect sensitive information, such as trade secrets or negotiations, by legally obligating the recipient not to disclose it to anyone else. Only a few trade partners, including Bangladesh, have been asked to sign an NDA in their trade deals with the US. This has raised concerns that the NDA will prevent public scrutiny of the commitments made, particularly the geopolitical issues.

Lessons learnt for future negotiations

Bangladesh's 2024 tariff negotiations with the US faced significant political and economic hurdles. The lessons learnt will help Bangladesh to respond quickly and proactively in future not only to US but also EU pressures. 

Among others, late negotiation, inadequate leverage, and limited stakeholder involvement were identified as features of Bangladesh's initiative in the tariff negotiation process. To improve its position in any future tariff negotiations with the US and others, Bangladesh could take lessons learnt from the 2024 Bangladesh-US tariff negotiations.

Act early and proactively: Bangladesh often engages only after threats become public. It is important to respond before crises escalate. For example, the Philippines engaged the US Trade Representative and key stakeholders immediately after tariff risks arose. 

Similarly, India quickly responded with formal complaints and engaged both the USTR and WTO. Malaysia acted quickly and used legal/diplomatic tools to avoid escalation. We need to anticipate, not just react. Early engagement can avoid surprises.

Diversify products and markets: Bangladesh's heavy reliance on the ready-made garment sector makes its economy vulnerable, especially in US and global trade talks. To reduce this risk, the country should diversify its exports instead of depending on one sector. 

Vietnam's mix of electronics, textiles, and agriculture has made it more resilient, while the Philippines has strengthened its position by focusing on digital trade, intellectual property compliance, and electronics. Bangladesh could follow similar paths by expanding into sectors like IT, pharmaceuticals, and agro-products, which could also help secure preferential tariffs. At the same time, it should develop strong backward linkage industries to boost overall competitiveness.

Bangladesh should also expand into Africa, the EU, and the Middle East to reduce US dependency. A broad product and market base will help avoid concentrated risk and strengthen its negotiating position.

Involve the private sector: Private sector voices in Bangladesh were notably absent during the negotiations. Business leaders complained of being kept in the dark until minutes before key deadlines, undermining government credibility and coordination. With just ten days before tariffs were to be activated, Bangladesh's export associations (notably BGMEA) began hiring US lobbying firms to support efforts—but progress remained limited due to time constraints. 

In this regard, Thailand relied on coordinated ministries and private-sector platforms; Bangladesh lacked early joint efforts. The private sector hired US-based lobbyists (eg, CGCN Group, Ballard) only very late in the process, limiting effectiveness. Bangladesh should institutionalise public-private strategic forums on trade and formalise such alliances early in trade disputes.

Build a strategic narrative: Bangladesh should leverage its strategic geography. In this context, Vietnam positioned itself as a vital US partner in Asia—Bangladesh could explore similar avenues. Thailand marketed itself as an ASEAN logistics and investment hub. Bangladesh could similarly leverage its access to the Bay of Bengal and South Asia. Moreover, Bangladesh could position itself in South Asia as a reliable value-chain partner to both East and West.

Work through US stakeholders: Bangladesh should strengthen diplomatic and economic ties with US policymakers and businesses. Moreover, Bangladesh should engage US importers, brands, lawmakers, and local lobbies. Strategic diplomacy and domestic reforms will be crucial in securing better tariff terms in the future.

Diaspora engagement: Influential diaspora communities can help pressure US lawmakers. Bangladesh's diaspora potential remains untapped in trade matters. Bangladesh could enhance its voice via diaspora diplomacy, UN activism, and LDC forums. 

For example, the large, politically active Filipino-American community helped defend GSP benefits—something Bangladesh has yet to mobilise effectively. Pakistan leveraged US-based professionals and business leaders; Bangladesh could build similar influential networks. Indonesia used its business community and diaspora networks to engage US officials and think tanks. Bangladesh has untapped potential in its US-based professional diaspora.

Engage US multinationals: Vietnam actively worked with US companies to serve as allies in Washington. Malaysia leveraged US-ASEAN business councils and multinational investors. Similarly, Indonesian exporters and government bodies coordinated proactively, especially with US partners. Bangladesh should nurture similar US company links in Washington.

Leverage through regional blocs: Bangladesh can strengthen its negotiation capacity by leveraging its regional blocs. Indonesia used ASEAN and Indo-Pacific positioning to frame itself as a constructive US partner. Similarly, China used ASEAN, RCEP, and BRICS to cushion against US pressure. Bangladesh could deepen ties with BIMSTEC, BBIN, the OIC, or the Global South coalition.

The 2024 Bangladesh-US tariff negotiations experienced significant political and economic hurdles. Eventually, Bangladesh managed Trump-era trade pressures by increasing US imports to reduce the deficit and leveraging its geopolitical importance to maintain favorable trade terms. These tariff negotiations present an opportunity to solidify one of Asia's most important emerging trade partnerships (i.e., Bangladesh). While differences on labor, subsidies, and geopolitics pose challenges, both nations stand to gain from a balanced agreement. The new tariff rate of 20% on Bangladeshi goods is set to take effect on 7 August 2025.

It can be argued that the tariff negotiations were influenced by broader US objectives—including curbing dependency on China and encouraging geopolitical alignment from Bangladesh. Firstly, Bangladesh tried to balance the trade relationship by increasing purchases of US goods (e.g., aircraft, LNG, agricultural products). This helped reduce pressure from the Trump administration. This approach allowed Bangladesh to preserve its export-driven economy while keeping access to the critical US market.

Secondly, in order to advance a broader strategic agenda, the US administration linked market access for Bangladesh's crucial apparel industry to concessions on geopolitical issues. Due to the signing of an NDA, there is limited information available in the public domain on the concessions that Bangladesh has given on geopolitical issues to the US.

Hopefully, Bangladesh is capable of balancing geopolitical strategy. In other words, Bangladesh needs to carefully balance US-China tensions to gain strategic flexibility. As a result, Bangladesh can benefit from a more balanced approach in regional alignments.

Sketch: TBS

Dr Sajjad M Jasimuddin is Professor (Professeur senior), Kedge Business School, and Head of Geopolitics Strategy Lab (France). He previously held faculty positions at several universities based in Bangladesh (Dhaka University), Saudi Arabia, the UK, the UAE, and China. 

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.