President Donald J. Trump's recent policies and initiatives surprised many developing nations, as the US ended its foreign aid programs and withdrew from the World Health Organization, where it had been a key member. On January 20, 2020, the newly elected president of the United States signed several executive orders to prioritize American interests and taxpayer-funded foreign aid initiatives. The Trump administration reinvested in tariff policies, imposing at least 25% tariffs on Canadian goods. China is also considering implementing tariffs with its European allies. These moves could have significant impacts on Bangladesh, a nation still recovering from political instability earlier this year. The interim government of Bangladesh must now address these challenges.

Exports of manufactured garments to Bangladesh increased by 7.23%, reaching $38.48 billion from $35.89 billion—highlighting the importance of US markets. The total Ready-Made Garments (RMG) exports stood at $46.09 billion for FY 2022-23, marking the highest RMG export figures in Bangladesh's history. Besides garments, Bangladesh earns foreign income from the export of jute products, fish, and leather goods. New tariffs imposed by President Trump pose potential risks to Bangladesh unless new trade policies are implemented. Bangladesh, as a developing country, is keen to secure the GSP+ facility. If this opportunity is missed, Bangladeshi exports to the US could face significant challenges.

According to a recent survey published by Bangladesh Bank, remittances from the United States constitute a major income source, estimated at $1.4 billion or more. President Trump's nationalist policies, including stricter visa regulations and potential deportation of foreigners, may negatively affect remittance flows from the US. Moreover, the Trump administration’s decisions could impact UN project funding in Bangladesh, as the US contributes significantly to the UN budget, including the UN Human Rights Council (UNHRC).

USAID suspension and job losses

The suspension of all USAID funding worldwide.decision disrupted USAID’s long standing relationship with Bangladesh, halting $490 million in development aid and $202.25 million allocated for the Development Objective Grant Objective. Thousands of jobs tied to USAID-funded programs will be lost, creating a critical challenge for Bangladesh’s interim government led by Dr. Muhammad Yunus. However, the assurance that USAID-funded initiatives related to the Rohingya refugee camps would continue, with $121 million committed, was welcome news. Dr. Yunus expressed gratitude to President Trump for the relief efforts. The pressing question remains: how will Bangladesh tackle the adversities posed by the US’s foreign and economic policies? Furthermore, the US provided millions of doses of Pfizer and Moderna vaccines to Bangladesh through USAID during the COVID-19 pandemic, alongside refrigerators to store the vaccines.

Enhancing bilateral trade and commercial relationships with the United States presents a significant opportunity for Bangladesh to adopt a more comprehensive trade strategy. The US actively pursued Foreign Direct Investments (FDIs) from Bangladesh, which is poised for transformation in the post-Sheikh Hasina era. Bangladesh recently signed a non-binding LNG treaty to import 5 million metric tonnes of liquefied natural gas annually from the US. This treaty, brokered by LLC, a US-based principal agent in Louisiana, and Ashik Chowdhury, Executive Director of the Bangladesh Investment and Development Authority (BIDA), may signal the start of a stronger investment partnership.

Reshaping foreign and trade policy

On October 21, 2024, Bangladesh appointed Mushfiqul Fazal Ansarey, a distinguished journalist, as its ambassador to the US. He is tasked with fostering stronger trade ties. Some speculate that Bangladesh’s pivot toward China, which has invested $23 billion in the country, may have influenced US policies towards Bangladesh. With China among Bangladesh’s key stakeholders, geopolitical considerations will play a significant role in Bangladesh’s energy security treaty negotiations with the US. Securing GSP+ privileges in 2026 must be a priority, along with establishing balanced diplomatic relations and fostering mutually beneficial ties with US stakeholders. Although USAID funding remains suspended, Bangladesh could regain US support to bolster its development efforts.

Michael Kugelman, a prominent American foreign policy writer and Director for South Asia at the Woodrow Wilson Center in Washington, DC, suggests there may be a shift toward more development-oriented relationships. While the Biden administration adopted a more generous approach to foreign aid, the Trump administration prioritized substantial financial incentives. Kugelman emphasizes that privatizing certain aspects of bilateral cooperation could benefit both the US and Bangladesh.

Since independence, the US has been a key partner in Bangladesh’s development efforts. The responsibility for reshaping foreign policy to ensure mutual benefits lies with the interim administration and the upcoming elected government. Additionally, the Bangladeshi diaspora in the US could play a significant role in strengthening ties between the two nations, ensuring opportunities for sustained US funding and resetting economic goals.

(The author, an executive officer at the People’s University of Bangladesh, is a post-graduate from the Department of International Relations, University of Dhaka. Views expressed are personal. He can be contacted at jaidulkarimiram@gmail.com.)