The United States and Bangladesh on Monday announced a new trade agreement aimed at easing tariff barriers on Bangladeshi goods, with a particular focus on the country’s crucial textiles and apparel sector. The deal includes a modest reduction in US reciprocal tariffs and a commitment by Washington to work towards duty exemptions for selected Bangladeshi textile and garment products, the White House said in a joint statement.
Under the agreement, the administration of President Donald Trump will reduce US reciprocal tariffs on Bangladeshi products from 20 per cent to 19 per cent. While the cut is limited, officials on both sides described it as a step toward stabilising trade ties and providing targeted relief to Bangladesh’s export-driven economy.
The reciprocal tariffs were first introduced by President Trump last year as part of a broader policy to address trade imbalances and practices the United States viewed as unfair. Bangladesh was initially subjected to a steep 37 per cent tariff rate, imposed during a sweeping action that affected dozens of economies. That rate was later reduced to 20 per cent in August, paving the way for further negotiations that culminated in Monday’s agreement.
Textiles at the Core of the Deal
Textiles and garments form the backbone of Bangladesh’s export economy, accounting for roughly 80 per cent of total exports. The sector has been in a gradual recovery phase following severe disruptions caused by a student-led revolution in 2024 that ultimately brought down the previous government. Factory shutdowns, supply chain interruptions and political uncertainty had taken a heavy toll on production and investor confidence.
Against this backdrop, the latest agreement places textiles and apparel at its core. Washington has committed to establishing a mechanism under which certain Bangladeshi textile and apparel products could qualify for a zero reciprocal tariff rate. This would allow specific volumes of eligible goods to enter the US market with preferential treatment, significantly lowering costs for exporters.
Crucially, the volume of Bangladeshi goods eligible for duty-free access will be linked to the level of US textile exports to Bangladesh. This includes US-produced cotton and man-made fibre inputs used in garment manufacturing. The linkage is designed to encourage greater use of American raw materials while supporting Bangladesh’s manufacturing base, creating what officials describe as a more balanced and mutually beneficial supply chain.
Beyond textiles and garments, the United States will also identify other Bangladeshi products that could qualify for a zero per cent reciprocal tariff under the agreement, although details on these categories are yet to be finalised.
Implementation and Official Reactions
The agreement was signed on Monday and will come into effect once both countries issue formal notifications. Muhammad Yunus, head of Bangladesh’s interim government, confirmed the development in a statement posted on social media, calling it a positive step for the country’s trade outlook.
Bangladesh’s National Security Adviser, Khalilur Rahman, said the proposed tariff exemptions for garments manufactured using US inputs would provide a significant boost to the apparel sector. He noted that preferential access to the US market could help accelerate the industry’s recovery, safeguard jobs and restore confidence among international buyers.
Trade Ties and Industry Impact
Trade between the two countries remains heavily skewed in Bangladesh’s favour. According to figures from the Bangladesh Bank and the National Board of Revenue, Bangladesh exported approximately USD 8.4 billion worth of goods to the United States in 2024, while importing goods worth about USD 2.2 billion from the US.
The United States is one of Bangladesh’s largest export destinations, particularly for ready-made garments. Major US clothing brands sourcing from Bangladesh include Fruit of the Loom, Levi Strauss and VF Corp, whose labels include Vans, Timberland and The North Face. Industry analysts say reduced tariffs and potential duty-free quotas could help these brands stabilise sourcing costs while reinforcing Bangladesh’s position as a global apparel hub.
While the immediate tariff reduction is modest, the broader framework for exemptions and deeper cooperation is seen as the more consequential outcome. If implemented effectively, the deal could mark a turning point for Bangladesh’s export sector and signal a more calibrated approach by Washington toward trade relations with key manufacturing economies.
Leave Your Comment