Bangladesh’s recently signed reciprocal trade agreement with the United States faces fresh uncertainty following the US Supreme Court’s landmark ruling, which struck down President Donald Trump’s broad emergency tariffs as unlawful.
The decision has prompted the Trump administration to impose new global tariffs, raising questions about the viability of the February 9 Agreement on Reciprocal Trade (ART), which promised tariff relief for Bangladeshi exports in exchange for significant concessions from Dhaka.
The Supreme Court, in a 6-3 decision on February 20, held that the International Emergency Economic Powers Act (IEEPA) does not authorise the president to impose tariffs, invalidating the legal basis for Trump’s sweeping “reciprocal” and other emergency duties. In response, the administration swiftly enacted a 10% additional tariff on most global imports effective February 24 (with threats of escalation to 15%), using alternative authority under Section 122 of the 1974 Trade Act.
This rapid shift has cast doubt on the ART deal’s foundation. Signed amid the interim government’s final days, the agreement reduced the US reciprocal tariff on Bangladeshi goods to 19% (from an initial higher level), with potential zero rates for select items—particularly textiles using US cotton inputs. In return, Bangladesh committed to extensive market openings: duty-free or phased-zero access for thousands of US products (including livestock, chemicals, machinery, and industrial goods), removal of non-tariff barriers, mandatory large-scale purchases (e.g., Boeing aircraft, billions in US energy like LNG, agricultural goods such as soybeans and wheat), alignment on sanitary/phytosanitary standards allowing easier US food/agri entry (including biotech products without full local testing or labelling), subsidy restrictions, and geopolitical clauses tying Bangladesh to US security and export control measures while limiting third-country deals that could harm US interests.
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Business leaders and analysts argue the deal’s rationale weakens if the original reciprocal tariffs it addressed are no longer enforceable under IEEPA. The new 10% global tariff (potentially rising) could override or compound the ART’s terms, exposing Bangladeshi exports—especially ready-made garments, the country’s largest US market earner—to higher effective duties and reduced competitiveness. Revenue losses from Bangladesh’s tariff concessions, forced high-cost imports, and subsidy curbs could run into billions, while opening markets to US goods risks flooding local sectors like agriculture and manufacturing.
Commerce Secretary Mahbubur Rahman described the Supreme Court ruling as an internal US legal matter but stressed the need for clarity on future US actions under Sections 122 and 301. “We maintain regular contact with the US side. All aspects will be reviewed before final decisions,” he said.
Stakeholders express dual concerns: the fate of the 19% ART rate amid the new global levy, and broader vulnerabilities from the deal’s one-sided obligations. BKMEA President Mohammad Hatem and Employers Federation President Fazle Shamim Ehsan called for reevaluation rather than outright cancellation—restructuring for balance, as the original basis has eroded.
Critics, including analyst Kallol Mustafa, highlight how the agreement disproportionately favors US interests: massive tariff cuts for over 6,700 US products (with immediate zero duties on 4,500), mandatory imports straining reserves, biotech/agri rules risking local farmers and biodiversity, subsidy limits hampering industry support, and hidden geopolitical entanglements restricting Bangladesh’s foreign policy autonomy (e.g., mirroring US sanctions and veto-like clauses on third-country pacts with “non-market” economies like China/Russia).
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Globally, the turmoil affects others too: the EU paused a deal approval, and India delayed talks. For Bangladesh, which relies on the US as its top export destination, the stakes are high. Without swift resolution, export disruptions could worsen amid economic pressures.
To chart a path forward, the Commerce Ministry convenes a key meeting on Wednesday with top officials, BGMEA, BKMEA, the Employers Federation, and sector representatives. Discussions will likely centre on three priorities:
1. Whether to maintain, renegotiate, or reassess the 19% ART framework given the changed US tariff landscape.
2. How the new 10% (or higher) global tariff applies to Bangladesh and potential mitigations.
3. Long-term strategies to safeguard competitiveness in the US market, including diversification and stronger diplomacy.
The meeting marks a critical first step for the new BNP-led government to address what many view as a hastily signed, imbalanced pact from the interim era. Urgent diplomatic engagement and stakeholder input will be essential to protect exports, fiscal stability, and sovereignty amid this volatile trade environment.
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