Dhaka, Bangladesh — In a swift diplomatic and economic response to new tariffs announced by former U.S. President Donald Trump, Bangladesh’s interim government, led by Nobel laureate and economist Muhammad Yunus, has unveiled a contingency plan aimed at preserving access to its largest export market.

Earlier this month, the United States imposed a 37 percent tariff on Bangladeshi exports — up from a previous 15 percent — striking a severe blow to the country’s $9 billion ready-made garment (RMG) industry. The move was part of Trump’s so-called “Liberation Day” tariff package, targeting multiple nations in a bid to reduce trade deficits.

However, within days, Trump reversed the decision, announcing a 90-day suspension of the tariffs for all countries except China. Bangladesh welcomed the temporary relief and pledged continued cooperation with the U.S. to address trade imbalances.

“We thank President Trump for responding positively to our request for a 90-day pause on tariffs,” Yunus stated. “Our administration will continue to engage constructively in support of mutual trade interests.”

The economic backdrop in Bangladesh has been challenging. After 15 years under former Prime Minister Sheikh Hasina, marked by allegations of corruption and capital flight exceeding $16 billion annually, the economy was in crisis. Hasina resigned in August 2024 following mass protests, leaving foreign reserves at a low of $18 billion.

Since taking over, Yunus’s interim government has restored reserves to $25.44 billion, driven in part by record remittances of $3.29 billion. The administration has also succeeded in stabilizing prices during Ramadan, typically a period of inflationary pressure.

In a letter to the Trump administration, Yunus proposed increasing Bangladesh’s imports from the U.S., particularly in the agriculture and technology sectors. He specifically mentioned plans to purchase U.S. cotton — a key raw material for Bangladesh’s garment industry — duty-free, helping balance the trade relationship.

Further proposals include a 50 percent tariff cut on U.S. exports such as gas turbines, semiconductors, and medical devices, as well as removing non-tariff barriers like product testing, packaging, and labeling regulations.

The strategy not only aims to protect Bangladesh’s vital export sector but also offers the U.S. economic incentives aligned with Trump’s stated goal of reducing the trade deficit.

Industry leaders in Bangladesh see additional opportunity in the shifting global trade landscape. With higher U.S. tariffs on Chinese garments, American brands may move manufacturing to Bangladesh — a trend that could offset increased logistic costs from greater U.S. imports.

Observers say Yunus’s economic acumen has allowed Bangladesh to act swiftly and smartly, securing breathing space for exporters and opening the door for deeper bilateral engagement.

The 90-day tariff suspension presents a critical window for Bangladesh to negotiate a longer-term solution — one that supports economic recovery while offering the kind of “win-win deal” Trump champions.

Sourced From The Diplomat