As the clock ticks toward an August 1 deadline, negotiations between Bangladesh and the United States over steep new tariffs imposed by Washington remain mired in complex geopolitical demands that extend far beyond trade. Despite consensus on core commercial issues, the third round of discussions between the two countries is now facing a critical impasse over strategic conditions pushed by the US - particularly relating to Bangladesh’s growing ties with China.
The bilateral negotiations have taken on a high-stakes dimension ever since US President Donald Trump, in a sweeping policy move on July 7, announced a new set of tariffs targeting imports from 14 countries - including Bangladesh. For Bangladeshi exports, this included a sharp 35% hike in tariffs, on top of a 10% counter tariff that had already been imposed globally in April. While the tariff hike was initially slated to go into effect from July 9, strong lobbying from Bangladesh and some other affected countries led to a short reprieve, with the implementation date pushed back to August 1. Bangladesh now has a narrowing window of opportunity to secure a negotiated compromise-or risk the crippling blow of the full tariff hike on its largest export market.Trade vs. Geopolitics: According to senior business leaders and diplomatic observers close to the process, the actual trade-related discussions between Dhaka and Washington have gone relatively smoothly. There is broad agreement on tariff structures, export monitoring, labor compliance, and intellectual property issues. But the real sticking points lie elsewhere - in what insiders describe as a “second layer” of strategic conditions that the US has linked to any tariff relief.
At the heart of these non-trade demands is Washington’s growing anxiety over China’s rising influence in South Asia. The Biden administration’s policy - further intensified under Trump’s re-election - seeks to prevent Bangladesh from entering into deeper strategic and economic alignment with Beijing.
One senior business leader, who requested anonymity due to the sensitive nature of the discussions, told the correspondent: “The Americans are clearly drawing lines. They are offering trade concessions but tying them to Bangladesh’s foreign policy stance. They want a commitment that we won’t expand our trade and defense ties with China. It’s no longer just about garments or exports. It’s a geopolitical negotiation now.”
Pressure to Curtail Ties with China: According to multiple sources familiar with the matter, the US has outlined several non-negotiable conditions in the ongoing tariff talks. These include: Bangladesh must not deepen defense ties with China and should instead consider shifting key military procurements to American suppliers. Bangladesh must comply with US sanctions policy globally - meaning Dhaka will be required to limit or avoid commercial dealings with any country under American sanctions, even if those sanctions are not supported by the United Nations. Bangladesh should refrain from offering duty-free access or special trade incentives to any countries seen by Washington as strategic rivals - a veiled reference to China and Russia. These demands have placed the Bangladesh delegation in a difficult position. While the interim government, led by Chief Adviser Dr. Mahbub Hossain, is eager to maintain tariff-free or reduced-tariff access to the US market, accepting such conditions could have profound implications for Bangladesh’s foreign policy independence. Commerce Adviser Sheikh Bashir Uddin, who led the recent round of talks in Washington from July 9-11, acknowledged the challenge. Speaking at a press conference in Dhaka on July 14, he said:
“Preparations are underway for the third phase of discussions. We’ve requested a timeframe from the US side and are hopeful for a reasonable resolution. Last week’s meetings were encouraging and engaging - but there are complex issues on the table beyond just trade.”
An Uneasy Silence: Despite growing media interest and public anxiety over the tariff threat, officials in Dhaka have remained tight-lipped. A non-disclosure agreement signed with the US government prevents both parties from revealing negotiation details publicly. However, the broader diplomatic community in the capital is abuzz with speculation.
Officials at the Ministry of Foreign Affairs and Ministry of Commerce have reportedly briefed top political figures and industry leaders behind closed doors, including members of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), and foreign policy analysts.
Commerce Secretary Mahbubur Rahman confirmed to the correspondent that the government is taking inputs from a wide range of stakeholders: 
“We’ve already held a meeting with economists and business leaders to hear their views. Another inter-ministerial session is planned before our team heads to Washington next week. We want to be fully prepared before the August 1 deadline.”
Why the US Market Matters: The stakes for Bangladesh could not be higher. The United States is Bangladesh’s single-largest export destination. In the fiscal year 2024-25, Bangladesh exported $8.69 billion worth of goods to the US - more than 18% of the country’s total export earnings. Of this, over 85% consisted of ready-made garments (RMG), which are already struggling with rising input costs, order declines, and volatile global demand.
Other major exports to the US include leather shoes, home textiles, caps, and wigs - many of which are low-margin products that will become uncompetitive overnight if the new tariffs take effect.
Economists warn that the 35% hike would be catastrophic for Bangladesh’s garment sector, already reeling from reduced European orders and rising energy costs. “This would price us out of the US market completely,” said Dr. Nazneen Ahmed, an economist and trade expert. “The supply chain is already under pressure. Losing the US would be like cutting off oxygen.”
Trump’s Letter to Prof Yunus: Adding a layer of political drama to the economic crisis, former US President Donald Trump - who remains an influential figure in the Republican party - reportedly sent a letter to Nobel laureate Professor Muhammad Yunus earlier this month. In the letter, which was partially leaked to the press, Trump mentioned the 35% tariff and expressed frustration over “Bangladesh’s repeated evasions on strategic cooperation.”
Although the letter did not elaborate on these claims, sources suggest that Yunus is being used as a backchannel to urge the interim government to comply with US demands, particularly those related to human rights, strategic alignment, and military procurement.
Domestic Politics and Diplomatic Calculations: The timing of the US pressure campaign is particularly sensitive, coming just months after a political crisis and amid deep divisions over the interim administration’s mandate. The government is walking a tightrope - trying to avoid being seen as capitulating to external pressure, while also preserving the economic lifeline that access to the US market provides.
Foreign policy analysts point out that Washington is capitalizing on this moment of vulnerability. “They know the interim government is fragile and wants international recognition,” said former ambassador Touhid Hossain. “So they’re pushing hard. But any concession now will set a precedent for future demands.”
The ongoing tensions also underscore a larger dilemma Bangladesh face: how to balance its growing economic partnership with China - which includes infrastructure investments under the Belt and Road Initiative (BRI) - with its dependence on Western markets for exports.
What’s Next: As the third round of negotiations nears, all eyes are on the Bangladeshi delegation’s next visit to Washington. Sources suggest that the US may offer a partial rollback of the tariffs - perhaps reducing the 35% hike to 15-20% - if Bangladesh agrees to a “strategic framework” that includes a roadmap for future alignment.
However, unless Dhaka can extract concessions without undermining its sovereignty, any short-term economic relief may come at a steep long-term cost. For now, uncertainty looms large. Exporters are holding off on shipping decisions. Buyers are renegotiating contracts. The government is under pressure from both domestic industries and diplomatic allies. And with August 1 approaching fast, Bangladesh faces a moment of reckoning - one that could reshape not only its trade with the US but the country’s entire foreign policy trajectory.