From tariff war to exit from WHO: How Bangladesh 2.0 will fare during Trump 2.0
How will Bangladesh be impacted by Trump's decisions? The Business Standard spoke to four experts — an economist, a public health expert, a former diplomat and a climate change expert — to find out
The Golden Age of America begins right now.
With this one declaration that summarises his objective, Donald Trump has begun his second term at the White House as the 47th President of the United States. Trump has already withdrawn from the World Health Organization (WHO) and the Paris Accord, tightened citizenship policies, and imposed tariffs, among other decisions that will impact the rest of the world.
How will Bangladesh be impacted by such decisions? The Business Standard spoke to four experts — an economist, a public health expert, a former diplomat and a climate change expert — to find out.
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Everything depends on the route Trump is going to take —
Professor Dr Mustafizur Rahman, distinguished fellow, CPD
It is hard to tell to what extent the effects of the tariffs would be since it has not been determined yet. If Donald Trump imposes a blanket tariff on every country, like a 10% tariff on all imports, it will not make much of a difference for us. However, the impact of differentiated tariff rates for different countries will be noteworthy. For this, we need to wait to find out what route Trump is going to take.
Suppose Trump imposes a 50% tariff on ready-made garment (RMG) imports from China and 10% on RMG imports from Bangladesh. Then there is a chance for our industry to reap benefits since 93% of our exports to the United States are RMG. Our RMG has strong supply-side linkages. We can easily increase our production. Since we are already a large-scale producer of RMG, our exporters will be quickly able to take advantage.
At the same time, if everyone is under animated suspense that Trump will impose more tariffs on China, then the market can react accordingly, not necessarily because of the actual trade war, but because of the speculation of it.
Trump may also emphasise various industry standards like labour rights and stricter inspection of product qualities as a protectionist measure.
We were arguing that we need some international support measures for our Least Developed Country (LDC) graduation. It is speculated that Trump will take a strong stance against such measures. This challenge coincides with Bangladesh's upcoming graduation from LDC status, potentially intensifying competitive pressures on its exports.
We must also remember that such gains from trade wars are usually short-term. We need to make any gain sustainable, if we get any due to differential tariff rates. Trade wars are usually harmful to the consumers. So, there can be an impact of that on the market as well.
Everything depends on what Trump decides to do in the upcoming days.
Despite uncertainties, Trump administration likely to cooperate with Bangladesh —
Humayun Kabir, Former Bangladesh Ambassador to the US
Trump has begun signing executive orders to fulfil his campaign promises. I think the new immigration policy could potentially impact Bangladeshi people. Eliminating the privilege of birthright citizenship could affect many individuals globally, including Bangladeshi expatriates.
Immigration and Customs Enforcement has already begun operations in various cities. If this continues, irregular Bangladeshi immigrants are likely to become anxious, and many may decide to return to Bangladesh.
Secondly, Trump has announced a 90-day suspension of foreign aid to reassess global spending. This decision could adversely affect humanitarian funding for our Rohingya crisis. It is a matter of concern for Bangladesh, as we heavily rely on international support under the Joint Response Plan to address the crisis.
A significant portion of this funding comes from the US, which now faces uncertainty for the next three months. This is likely to have a multiplier effect down the line.
Then the US withdrew from both the Paris Agreement and the World Health Organization. This will surely have an impact. On one hand, Bangladesh is a climate-vulnerable country; on the other, its healthcare system is fragile. Losing US leadership and funding in these sectors will add more uncertainty and challenges for countries like ours.
Another point is that he intends to impose a 10% tariff on imports from all countries, starting with China in February. Although he has not made a final announcement, if implemented, it would have an indirect negative impact on our export sector as well.
The mass uprising in Bangladesh occurred to push the country towards a democratic process, and reform efforts are underway. If Bangladesh becomes economically strong and transforms into an inclusive state, it will play a crucial role in fulfilling the geopolitical goals of the US in this region. Therefore, I believe the Trump administration will maintain a cooperative relationship with the interim government.
Trump leaving WHO a threat to developing countries —
Dr Taufique Joarder, Associate Professor, Global Health Evaluation, SingHealth Duke-NUS Global Health Institute
The United States leaving the WHO is a significant issue. WHO provides support to various governments on numerous matters, such as medical products, medical workforce, blood transfusion, and more. It offers us technical assistance in these areas. Naturally, if their funding decreases, all these forms of assistance will be reduced.
Moreover, we receive substantial funding in the health sector, particularly from USAID, which provides significant funds to combat malnutrition. However, as of yesterday, the newly elected leader has announced that all such funds will be reviewed. If deemed unnecessary, they may be stopped entirely.
If this funding ceases, many projects in Bangladesh will halt.
Various NGOs in rural areas operate with this funding, supporting grassroots-level work. If this funding stops, these efforts will cease, and there will be no guarantee when or if these projects will resume. Some projects may shut down permanently, which would be a major setback for Bangladesh.
On the very first day of coming into power, the new administration initiated discussions with countries like Japan, Australia and New Zealand. This highlights the nuances of international politics. Furthermore, the administration has stated that any global funding by the US that does not align with its foreign policy will be terminated.
This is, in essence, a threat to developing countries and diverse demographics. It reflects a shift in international relations. Previously, the US used to provide global support even beyond the constraints of foreign policy to maintain relationships. However, halting such support is embarrassing for the country itself.
This will exert additional pressure on the Bangladeshi government, forcing them to align with US policies. Ultimately, both governments will face challenges under such circumstances.
I am highlighting two main issues: firstly, the technical assistance from WHO, and secondly, the cessation of US global funding.
Additionally, there is the matter of sexual and maternal health assistance. When Republicans come to power, there are certain constraints in these areas. I know this firsthand from acquaintances working in USAID. They have mentioned that under the Trump administration, they could no longer provide funding in sectors like maternal health, sexual health, and hygiene, which are interconnected. A cessation of funding would create significant problems in these areas.
Who will lead global climate financing? That's the big question and challenge now —
M Zakir Hossain Khan, Chief Executive, Change Initiative
Truth be told, the US has not been doing well in meeting the Paris Agreement targets, and American oil and gas companies have a poor track record.
The US leaving the Paris Agreement is concerning, but what is even worse is that they plan to increase fossil fuel production and export oil and gas globally. If carbon emissions keep rising, helping least developed countries with climate finance will not be enough.
Many developed countries may now become discouraged. Russia or countries in the Middle East might abuse this opportunity. If carbon emissions increase further, it will be counterproductive for us.
The bigger challenge now is that when the second-largest carbon emitter pulls out of the Paris Agreement, there is a high chance that it will end up like the failed Kyoto Protocol.
In terms of climate finance for LDCs, less than 5% has gone towards adaptation funding so far. Overall, grant-based finance has been around 5-6%. This means that even with the US involved, we have not received enough climate funds. Also, the $300 billion commitment made at COP29 is uncertain, and no one knows how much of it will actually come through.
So, who will lead global climate financing? I think that is the big question and challenge now.
LDC countries should take a strong united stance now. By this year, they should make some basic joint declarations.
A study has shown that just 57 oil, gas, coal, and cement companies are directly responsible for 80% of global CO2 emissions. One possible approach could be to give these companies an ultimatum to reduce their carbon emissions by 50% by 2030. Otherwise, the LDC countries will impose a carbon tax on their products locally.
Secondly, each year, about $1.4 trillion is provided worldwide as public subsidies on fossil fuel. Half of this amount should be redirected to the LDCs.
Thirdly, in exchange for trade facilities with these countries, there should be a commitment to climate finance from them.
Being a key stakeholder of the climate-vulnerable forum, Bangladesh must engage in direct and clear dialogue with the US.
