The Trump presidency (2017-2021) dramatically changed American trade policy and international engagement, as it chose to go by the phrase 'America First'. This time also the Trump presidency has chosen to take the same path. It has disengaged itself from different global pacts. It has triggered a trade war resulting in imposition of excessive tariffs and a reshuffle in existing trade agreements.
It seems that US President Donald Trump in the second term continues treading the same path and in a more aggressive way. Of course, it has implications for the world economy and Bangladesh is not immune to it, especially in view of the USAID fund cuts.
In 2017, the Financial Times reported significant shifts in trade policy under Donald Trump. The Financial Times noted substantial changes in commerce regulations under Donald Trump. He didn't just say no to the Trans-Pacific Partnership; he also changed NAFTA, which resulted in a new trade deal called the United States-Mexico-Canada Free Trade Agreement (USMCA). This fresh contract sought to upgrade workforce and ecological parameters concurrently amending customs duties, which has significantly influenced worldwide commerce patterns.
The Trump presidency in the second term has introduced new trade policies, including hefty tariffs on import of goods from America's three biggest trading partners - Mexico, Canada and China. Trump promises that more targets are on the horizon. Under an executive order signed by U.S. President Donald Trump recently, 25 per cent import tariffs have been put in place on all Canadian steel and aluminum entering the United States. Canada has also retaliated with tariffs on $29.8 billion worth of goods from the US.
On the other hand, China has retaliated against Trump's tariffs by imposing additional 15 per cent taxes on key American farm products, including chicken, pork, soybeans and beef The Chinese tariffs came in a response to Trump's decision to double the levy on Chinese imports to 20 per cent on March 4. On the same day the U.S. administration imposed tariffs of 25 per cent on almost all imports from Canada. The US President later allowed Mexico not to pay tariffs on goods covered by the USMCA until April 2.
The European Union has taken retaliatory trade action with new duties on U.S. industrial and farm products, responding within hours to the Trump administration's increase in tariffs on all steel and aluminum imports to 25 per cent.
The Trump administration has also cut USAID funding, affecting humanitarian work in different countries including Bangladesh. The declining humanitarian aid comes as a bombshell for more than a million Rohingya people living in Cox's Bazar refugee camps.
The Trump administration is also pushing for excessive production of domestic oil, although many in the industry doubt its success. These steps have triggered a sense of trade uncertainty, encouraged companies to move iron ore sourcing away from China. In this situation the companies are looking for trade relations with other territories, triggering fiscal uncertainty worldwide.
Bangladesh is one of the emerging hubs in the world, playing a pivotal role in the ready-made garment (RMG) sector. An increase in duty or other trade restrictions will impede the demand for the product in the US market and thus hit the export earnings0 of Bangladesh.
Furthermore, remittance is the biggest contributor propping up Bangladesh's foreign exchange reserves, thanks to workers who are scattered all over the world and remit home their hard-earned money. A significant portion of remittance earnings comes from the USA. So there may be an impact on the remittance flow from the US.
The USAID has a wide range of support in the form of grants for different projects in the fields of health, education, livestock and climate. On January 21, 2020, Donald Trump signed an executive order prohibiting all USAID activities in Bangladesh, except for the Rohingya. But this time the Rohingya people have not been spared. President Trump has frozen USAID funds, affecting development work in many countries, including Bangladesh. As a result, many NGOs will face problems with continuing their development initiatives. In this situation Bangladesh can turn to other sponsors, especially in the EU. The government needs to focus on some measures including raising tax collection and encouraging public-private partnership further in project implementation. It also should sharpen its focus on education and training in a bid to produce a skilled workforce and go for export diversification, trade negotiation and regional cooperation at a faster pace.
The writer is an alumnus of The Fletcher School of Law and Diplomacy, Tufts University, USA, and works at WAVE Foundation. The article reflects the views of his own, not of the organisation he works for.
toufique @wavefoundationbd.org
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