While much of the world faced uncertainty in recent days over President Trump’s fluctuating tariff levies, Bangladesh seemed relieved that it “only” would have to pay 20%, up from an existing average of 15%, but far below the 37% Washington originally was threatening.
Muhammad Yunus, the temporary, transitional head of state following a revolution one year ago, called it a "decisive diplomatic victory," according to Rueters.
For Americans, many of whom may not be able to locate Bangladesh on a map, its story illustrates the mechanics of tariffs. Officials in Bangladesh seem relieved that its main rivals for U.S. exports – Vietnam, Sri Lanka, Pakistan and Indonesia – all ended up with similar tariffs in trade with the United States. That means none of the garment-producing countries in South Asia gains a competitive advantage, except that India, for the time being, at least, has a 25% tariff.
But for Americans, the increase to 20% may translate into a slightly higher price for clothing and shoes they buy at stores without giving much thought to the country of origin. Maybe higher prices will lead you to make fewer impulse clothing purchases. In that case, Bangladeshi garment workers could be laid off. That could ripple through the nation’s fragile economy as laid off workers no longer can afford necessities, let alone luxuries, thereby reducing the profits of merchants, grocers and others.
Under the worst-case scenario, it could lead to political upheaval or foster resentment toward the United States.
During a recent trip to Bangladesh, a teeming nation of about 171.5 million people crammed into a space roughly the size of Iowa, I observed some of its 4,000 garment factories from afar.
Bangladesh’s readymade garments industry accounts for more than 80% of the nation’s earnings on exports, Reuters said. It employs about 4 million people and makes up about 10% of the nation’s economy.
You end up paying for this in exchange for a variety of items ranging from underwear and swimsuits to shoes and fashionable clothing.
Bangladesh is the embodiment of the old saying that when the United States sneezes, the rest of the world catches a cold. In this case, Bangladesh is likely just glad it won’t catch pneumonia.
The United States imported $8.4 billion from Bangladesh in 2024, according to the office of the United States Trade Representative. But the U.S. exported $6.2 billion less than that back to the South Asian country.
In return for the lower tariffs, Bangladesh has agreed to close that gap a bit by buying about 220,000 metric tons more of American wheat, according to Reuters.
Previously, Bangladesh had received U.S. wheat for free through the U.S. Agency for International Development, or USAID, which the Trump administration has been defunding.
Also, Bangladesh will buy 25 aircraft from Boeing.
Reuters quoted Khalilur Rahman, Bangladesh’s national security adviser and lead negotiator, saying, “Protecting our apparel industry was a top priority, but we also focused our purchase commitments on U.S. agricultural products. This supports our food security goals and fosters goodwill with U.S. farming states."
But it can’t be better than the way things used to be, only better than they might have been without a deal.
As with most tariffs, Americans may feel some annoying price increases, but the nations involved are left scrambling to keep their economies growing while competing with their neighbor to keep a foothold in the world’s largest and most lucrative economy.
Muhammad Yunus, the temporary, transitional head of state following a revolution one year ago, called it a "decisive diplomatic victory," according to Rueters.
For Americans, many of whom may not be able to locate Bangladesh on a map, its story illustrates the mechanics of tariffs. Officials in Bangladesh seem relieved that its main rivals for U.S. exports – Vietnam, Sri Lanka, Pakistan and Indonesia – all ended up with similar tariffs in trade with the United States. That means none of the garment-producing countries in South Asia gains a competitive advantage, except that India, for the time being, at least, has a 25% tariff.
But for Americans, the increase to 20% may translate into a slightly higher price for clothing and shoes they buy at stores without giving much thought to the country of origin. Maybe higher prices will lead you to make fewer impulse clothing purchases. In that case, Bangladeshi garment workers could be laid off. That could ripple through the nation’s fragile economy as laid off workers no longer can afford necessities, let alone luxuries, thereby reducing the profits of merchants, grocers and others.
Under the worst-case scenario, it could lead to political upheaval or foster resentment toward the United States.
During a recent trip to Bangladesh, a teeming nation of about 171.5 million people crammed into a space roughly the size of Iowa, I observed some of its 4,000 garment factories from afar.
Bangladesh’s readymade garments industry accounts for more than 80% of the nation’s earnings on exports, Reuters said. It employs about 4 million people and makes up about 10% of the nation’s economy.
You end up paying for this in exchange for a variety of items ranging from underwear and swimsuits to shoes and fashionable clothing.
Bangladesh is the embodiment of the old saying that when the United States sneezes, the rest of the world catches a cold. In this case, Bangladesh is likely just glad it won’t catch pneumonia.
The United States imported $8.4 billion from Bangladesh in 2024, according to the office of the United States Trade Representative. But the U.S. exported $6.2 billion less than that back to the South Asian country.
In return for the lower tariffs, Bangladesh has agreed to close that gap a bit by buying about 220,000 metric tons more of American wheat, according to Reuters.
Previously, Bangladesh had received U.S. wheat for free through the U.S. Agency for International Development, or USAID, which the Trump administration has been defunding.
Also, Bangladesh will buy 25 aircraft from Boeing.
Reuters quoted Khalilur Rahman, Bangladesh’s national security adviser and lead negotiator, saying, “Protecting our apparel industry was a top priority, but we also focused our purchase commitments on U.S. agricultural products. This supports our food security goals and fosters goodwill with U.S. farming states."
But it can’t be better than the way things used to be, only better than they might have been without a deal.
As with most tariffs, Americans may feel some annoying price increases, but the nations involved are left scrambling to keep their economies growing while competing with their neighbor to keep a foothold in the world’s largest and most lucrative economy.
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