The global economy has been on a roller-coaster ride since US President Donald Trump, returning to office for a second term, sought to rewrite the rules of global trade by imposing sweeping tariffs on imports into the United States (US) from most countries. As the US remains the primary export destination for much of the world, many countries, including Bangladesh, scrambled for stabilising their trade relations by urgently renegotiating terms and signing new bilateral deals with Washington. Now, the US Supreme Court has struck down Trump's global tariffs and declared them illegal. The ruling stated that the president had exceeded his authority under the International Emergency Economic Powers Act (IEEPA) by imposing sweeping reciprocal tariffs without congressional approval. The court ruling has not only invalidated the Trump tariffs but also undermined the legal foundation of the trade agreements that several countries signed with the United States in response to the imposition of 'reciprocal tariffs'.
Meanwhile, never willing to back down easily from a fight, President Trump immediately imposed a 10 per cent flat tariff on all countries, invoking Section 122 of the Trade Act of 1974. He then raised the global tariff to 15 per cent on Saturday. However, such a presidential proclamation is typically limited to 150 days unless extended by the Congress. Trump has also announced that, in the coming months, his administration will explore alternative avenues to impose "legally permissible" tariffs. So, as it appears, the Supreme Court's verdict may not mark the beginning of a period of stability; rather, it has made the global trade outlook even more uncertain. One silver-lining, however, could be that, compared with a differentiated reciprocal tariff regime, a uniform tariff applied to all countries creates a level playing field for exporters to the United States.
For Bangladesh, the situation has become even more complicated due to the signing of the Reciprocal Trade Agreement (RTA) with the United States. In a bafflingly rushed move, the interim government signed the RTA with Washington just two days before the national elections, at a time when the legality of the tariff measures was already under scrutiny by the US Supreme Court. Critics have questioned the transparency and legitimacy of an interim administration entering into such a long-term and binding agreement. Now, the court ruling may lead to the abolition of reciprocal tariffs, but bilateral agreements already signed will not automatically become void. However, economists have pointed out that if the original legal basis of those tariff measures has been invalidated, the rationale for the agreement itself also becomes questionable. Experts therefore suggest that Bangladesh reassess the deal in the light of the changing policy landscape in Washington.
Furthermore, the agreement is scheduled to take effect two months after the exchange of formal notifications. The process is yet to be completed. This provides a crucial window for further dialogue. Bangladesh must urgently review the agreement clause by clause to identify provisions that may have become redundant following the invalidation of reciprocal tariffs. In navigating this evolving situation, Bangladesh must proceed cautiously, prioritising national interests while maintaining constructive engagement with the United States.
