US President Donald Trump on Monday slapped a 35% tariff on Bangladeshi goods, 2% lower than his initial rate announced three months ago, but significantly higher than close rival Vietnam (in the field of RMG), which recently secured a trade deal with the US under which its goods will be charged a tariff of 20%.
Trump made the much-anticipated announcement on his Truth Social account, by publishing his letter dated July 7 to Chief Adviser Muhammad Yunus at 2.36am (Tuesday) Bangladesh time. He posted identical letters to other world leaders revealing the tariff rates for their respective countries, which said the new rates would be effective from August 1.
Apart from Bangladesh, it was learned on Monday that imports from Myanmar and Laos would be taxed at 40%, Cambodia and Thailand at 36%, Serbia at 35%, Indonesia at 32%, South Africa and Bosnia and Herzegovina at 30% and Japan, South Korea, Kazakhstan, Malaysia and Tunisia at 25%. More letters may be forthcoming.
The letters warned Trump’s counterparts to not retaliate by increasing their own import taxes, or else the Trump administration would further increase tariffs.
“If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 35% that we charge,” Trump wrote in the letter to Yunus.
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A Bangladeshi delegation remains in Washington for last-ditch talks with the US Trade Representative's office, but Trump’s word could be final for now. He did however add: “If you wish to open your heretofore closed Trading Markets to the United States, and eliminate your Tariff and Non Tariff, Policies and Trade Barriers, we will, perhaps, consider an adjustment to this letter.”
Meanwhile, the AP reports that following a now well-worn pattern, Trump plans to continue sharing the letters sent to his counterparts on social media and then mail them the documents, a stark departure from the more formal practices of all his predecessors when negotiating trade agreements.
The letters are not agreed-to settlements but Trump’s own choice on rates, a sign that the closed-door talks with foreign delegations failed to produce satisfactory results for either side, according to AP.
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So far, the US has reached trade deals with only two nations, the United Kingdom and Vietnam, as well as a partial deal with China. A deal with India is said to be close.
The deal with Vietnam is seen as significant for Bangladesh, as it is a direct competitor in the lucrative RMG market. Trump said on Wednesday that the US will charge 20% tariffs on imports from Vietnam under the new deal. That is significantly lower than the 46% announced earlier, which was set to go into effect from July 9, at the end of a 90-day pause that Trump had announced to his original announcement of ‘reciprocal tariffs’ on almost every country around the world that the US trades with.
In order to secure that large reduction from 46% to 20% though, Trump said Vietnam agreed to charge no tariffs at all, on US products. In the 2023-24 fiscal, Bangladesh's tariffs on imports from the US earned the government revenues of almost Tk 1500 crore, according to official figures.
A tariff is an import tax or duty that is imposed on imported goods, payable by the importer. By increasing the cost of imported goods, they are meant to make them less competitive in the importing country's market.
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If the importers, say in this case US buyers of Bangladeshi RMG, are unwilling to bear the extra cost, the exporters, i.e. Bangladeshi RMG firms, would have to reduce their prices to retain competitiveness.Prior to Trump taking office, Bangladeshi imports into the US were subject to an average tariff of 15%.
SOURCE : UNB