Bangladesh's stakes in Trump's trade policy

The winning of Donald Trump as the 47th president of the United States of America on Wednesday appears to be a big blow to the world economy and trade. The Republican Party leader has yet to be formally declared as the country's president, although the primary results of the Electoral College votes confirmed that Kamala Harris, the current vice-president and Democratic candidate, has been cornered.

After a catastrophic debate performance and the subsequent questions about his ability to lead the US for another four years - let alone defeat Trump in November's election - Biden chose to end his re-election campaign in July 2024. Thus, Harris entered the stage. She made tremendous efforts while campaigning, and most of the pre-poll projections tilted in favour of her. Nevertheless, November 5, the election day, was the ultimate day when US citizens voted for their preferred candidates. Trump bagged 277 electoral college votes until our going to press, more than 270 votes, while Harris bagged only 224.

The global market has already reacted to the winning of Trump as the dollar surged the most in two years, and US bond yields jumped. Analysts said that the investors piled into bets that Trump would retake the White House.

The US currency raced higher against the euro, the yen and the pound on Wednesday as traders returned to the so-called "Trump trades" based on expectations that the former president's plan to raise tariffs and cut taxes would push up inflation and keep interest rates high, according to the Financial Times (FT).

With the winning of Trump, his trade policy has also come into focus now, and analysts are calculating the cost of possible measures like swiftly imposing a 60 per cent tariff on Chinese goods and at least a 10 per cent levy on all other imports. China will retaliate, leading to a "much worse rerun of the Republican former president's 2018-2019 trade war with China that hit US farm goods with retaliatory tariffs and shifted Beijing's purchases to Brazil and Argentina," according to Reuters.

Despite all the global concern, Trump's presidency may bring some positive outcomes for Bangladesh, provided that the country can deal with Trump's trade agenda. His trade policy stance is clear, and so, it will be easier to deal with. If Bangladesh wants to get tariff-free access to the US market, it should make an explicit 'request and offer' for trade in goods, services and investments. Unlike Biden or the Democrat Party's trade policy, which focuses on more hectic negotiations with a lot of components, Trump's trade agenda will be less complex. Bangladesh may consider granting the US products the zero-duty market access in exchange for tariff-free access to the US market. Having a favourable trade balance of US$ 6 billion in the last year, Bangladesh has little to lose as the US products are primarily expensive. There will be no surge in imports from the US, as apprehended by some. Instead, Bangladeshi products, especially ready-made garments (RMG), will get tariff-free access. 

Currently, Bangladeshi products have to face a 15.70 per cent tariff on average in the US market. Even if it could be reduced to a single digit, it will be a big achievement for the country. In a piece published in the FE on November 5, 2024 this scribe has argued that as the country is set to graduate from the Least Developed Country (LDC) status by 2026, enhancing trade cooperation with the US is critical, be it in the form of Bilateral Free Trade Agreement (BFTA) or Strategic Trade and Investment Partnership (STIP). Trump's presidency brings an opportunity to explore the possibility of hectic negotiation. Bangladesh needs to work in that direction. Non-reciprocal trade deals like GSP and multilateral, regional arrangements have already been excluded from the US trade agenda, and Trump will strengthen the stance and stress on bilateral reciprocal trade deals. He did it earlier in 2016-2020.

Regarding the geopolitical issues, there is also little to worry about; the US stance on Bangladesh is unlikely to change. Trump alone cannot reset the US geopolitically, and it requires the US long-term global perspective and many other issues. Moreover, more big issues like the Russia-Ukraine war and Israel's war on Gaza and Lebanon are there that require much attention from the US president and policymakers.

Manzur Ahmed is Trade and Tariff Policy Adviser, FBCCI, 1980-2024.

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