In the year 2016, Bangladesh’s interim government head, Muhammad Yunus had termed Donald Trump’s win as a solar eclipse. He also referred to Trump’s presidency as black days.
Yunus may have spoken too soon. While Yunus went on to head an unruly country as a caretaker, Donald Trump stunned the world with a spectacular victory in 2024.
Yunus who finds himself largely isolated in the international community only has George Soros to look up to. Recently he met with Soros’ son and discussed issues relating to the economy of Bangladesh.
However, Yunus is well aware that Donald Trump is out to finish the deep-state, which is largely controlled by Soros. He was quick to change track and congratulated Trump and said that he was confident that under his leadership the US will prosper.
“Bangladesh and the US share a long history of cooperation in many fields. Our partnership has grown stronger during your first term, and I look forward to further strengthening our ties and promoting sustainable development,” he said.
For Yunus the biggest concern is that he is running a country where the economy is collapsing. Adding salt to the injury is the suspension of USAID by Trump. Yunus is now in a spot of bother and would find it extremely hard to navigate the crisis.
Bangladesh hit hard
The freezing of USAID has hit Bangladesh hard as it stalls plenty of US funded projects. US funded projects across sectors including health, education and governance will be the hardest hit.
Trump while announcing the freeze for 90 days said that he would review the assistance to ensure alignment with US foreign policy goals. Bangladesh has relied on USAID heavily to address food security, manage economic concerns and improve its education sector.
On January 25 USAID had issued a directive to its partners in Bangladesh and instructed them to immediately halt any work under their contracts. “This letter serves as a directive to all USAID/Bangladesh implementing partners to immediately stop, cease, and/or suspend any work performed under your respective USAID/Bangladesh contract, task order, grant, cooperative agreement, or other acquisition or assistance instrument,” read the directive.
Out of the $72 billion USAID, $401 million was given to Bangladesh. One of the biggest projects to be hit will be the Bangladesh America Maitree Project which is USAID funded. The project had been launched last year to promote sustainable development. Now the future of this project lies in limbo.
The state of affairs in Bangladesh can be understood from the fact that the country has sought $5 billion in financial assistance from international lenders. In 2023 when Sheikh Hasina was Prime Minister, her government had sought a $4.7 billion bailout from the International Monetary Fund (IMF). This is extremely crucial for Bangladesh if it has to stabilise its foreign reserves which are rapidly shrinking.
With the bailout packages yet to be approved, the freezing of the USAID is a big blow for Bangladesh.
There is growing economic instability in the country owing to the unrest and the radical elements taking over. With such incidents of violence particularly against the Hindus and the cozying up to Pakistan has eroded investor confidence. Dhaka is now looking to China, but the response from Beijing would largely depend on how the situation in the country is. China is already feeling the heat in Pakistan where its nationals have come under attack which has led to the slowing down of its projects.
Bangladesh is also facing a huge unemployment crisis. In 2024 the unemployment rate stood at 4.49 per cent. Data from the Bangladesh Bureau of Statistics (BBS) shows that there are approximately 240,000 new unemployed individuals.
The only solace for Bangladesh is that the freezing of USAID will have no impact on the aid for the Rohingya refugees.
Challenge ahead
Some experts are of the belief that Trump’s trade policies may present Bangladesh with major opportunities. When inflation rises, consumers in US and Europe are likely to lean towards Bangladesh for affordable clothing.
With tariffs imposed on China, Bangladesh hopes that American buyers may seek alternate markets. Bangladesh could be an option for low and medium end brands, the experts feel.
While this sounds good on paper, the reality is that Bangladesh is struggling to capitalise on opportunities due to lack of infrastructure. Gas and electricity costs are rising rapidly and this has disrupted production. This in fact could be a positive for Bharat as it is most likely to seize the opportunity due to shortfalls in Bangladesh.
Bangladesh may be trying to find positives and even if they succeed it would be short term. Many countries including the United States is boosting self-reliance and this is not good news for Bangladesh since it is heavily reliant on the export market.
Trump had heavily focused his campaign around nationalism and so far he has delivered on that. If he continues with this then he is likely to impose tariffs on Bangladesh. The other bad news for Dhaka is that there is an ongoing trade war between the US, Canada, Mexico and China. This would lead to a reduction in economic growth which would eventually reduce purchasing power. Eventually this would lead to a lower demand for low for goods from Bangladesh. The country could be further hit if Trump offers tariff advantages to countries allied to the US.
