Although U.S. courts repeatedly ruled that the sweeping tariffs imposed by President Donald Trump's administration were unlawful, the latter kept devising new policies to circumvent the court rulings and keep the tariffs in place, which is completely unreasonable. Now, amid growing concerns over rising global inflation driven by a protracted crisis in the Middle East, the U.S. government has imposed additional tariffs on 60 countries, citing labour-related deficiencies. At a time when the global economy is already grappling with heightened uncertainty, this move is likely to deal a blow to both the U.S. economy and the global economy, further aggravating the situation.
Citing insufficient measures to combat forced labour, the U.S. government has imposed 10 per cent and 12.5 per cent new tariffs on goods from 60 countries and regions under Section 301 of the Trade Act. Bangladesh, India and Pakistan, among others--- known for taking certain corrective measures--- will face a 10 per cent tariff. By contrast, the European Union, China, Vietnam and several other economies will be subjected to a 12.5 per cent tariff. The Trump administration has said the new measures are necessary because dozens of countries have failed to enforce bans on goods produced by forced labour. It argues that fair competition is being undermined as low-cost goods manufactured by forced labour gain access to international markets. However, this logic cannot be accepted at its face value. The mechanism appears to have been devised as a last-ditch attempt to maintain the administration's tariff agenda after U.S. courts ruled that many of its earlier tariffs were unlawful.
However, the latest round of tariffs will also face legal scrutiny. On Friday, two U.S. small businesses filed a lawsuit in the U.S. Court of International Trade in New York, arguing that the new tariffs require more detailed, country-specific findings on unfair trade practices to be legally justified. High tariffs have been one of President Donald Trump's flagship policies for reviving domestic manufacturing and bringing jobs back to the United States. To what extent the reciprocal tariffs introduced in April last year have succeeded in achieving those objectives remains unclear. What is clear, however, is that they have fuelled inflation and increased the cost of living, particularly for low-income Americans. Recent polls show that six in ten Americans disapprove of President Trump's handling of tariffs on imported goods. There is also a growing international criticism. But Trump administration is hell-bent on tariffs.
That said, the new tariffs have come as a relief to Bangladeshi exporters. This is because the country is placed in the lowest tariff bracket while several of its major competitors are subjected to higher duties. As a result, exporters are upbeat about retaining a competitive edge in the U.S. apparel market. However, this apparent advantage has come at a price. To avoid steeper tariffs, Bangladesh has literally been coerced into accepting a lopsided trade arrangement with the United States. As per the deal, there are growing concerns that Bangladesh will have to significantly increase imports from the U.S. potentially at higher costs and at the expense of domestic industries, particularly the agricultural sector. Needless to say, such coercive trade practices are neither fair nor conducive to the spirit of friendly bilateral relations. Moreover, the U.S. government is currently conducting separate investigations targeting 16 countries including Bangladesh regarding overproduction. The government should closely monitor these developments and be prepared to review the Bangladesh-U.S. Agreement on Reciprocal Trade (ART) if Washington continues to pursue unfair trade policies. The country's long-term economic interests should not be compromised for short-term trade concessions.