The United States has reduced tariffs on Bangladeshi exports to 19 per cent under a newly signed bilateral trade agreement, offering significant relief to Bangladesh’s export-driven economy, particularly its textile and apparel sector. The deal, concluded after nine months of negotiations, also includes zero reciprocal tariffs for certain garments produced using US-origin cotton and man-made fibre.
Bangladesh’s Chief Adviser to the interim government, Muhammad Yunus, confirmed the agreement on Monday, stating that Washington has committed to establishing a mechanism that allows select Bangladeshi textile and apparel products to enter the US market duty-free when manufactured with US raw materials.
Expanded Market Access for US Goods
In return, Bangladesh has agreed to provide broad preferential market access to US industrial and agricultural exports. According to the White House, this includes chemicals, medical devices, machinery, motor vehicles and parts, soy products, dairy items, beef, poultry, tree nuts, and fruit.
The agreement also addresses long-standing non-tariff barriers. Bangladesh will align with US vehicle safety and emissions standards, recognise certifications from the US Food and Drug Administration, and remove import restrictions on remanufactured goods.
Major Commercial Commitments Announced
Both governments highlighted substantial commercial commitments linked to the deal. These include:
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Planned procurement of 14 Boeing aircraft by Biman Bangladesh Airlines, with options for additional purchases
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Approximately $3.5 billion in US agricultural imports
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An estimated $15 billion in US energy product purchases over the next 15 years
The 32-page agreement released by the Office of the US Trade Representative (USTR) also notes that Bangladesh will acquire select US military equipment and reduce procurement from certain other countries.
Labour and Environmental Safeguards
As part of the agreement, Bangladesh has pledged to uphold internationally recognised labour rights and strengthen environmental protections — areas that have long been under scrutiny due to the country’s reliance on low-wage manufacturing.
Yunus said negotiations began in April last year and intensified after Bangladesh secured an initial tariff reduction to 20 per cent in August, down from the 37 per cent originally proposed by Washington.
How Bangladesh Compares With India
Bangladesh’s new tariff rate is marginally higher than the 18 per cent rate agreed for Indian exports under a separate arrangement announced last week by the US administration. However, India’s deal remains under negotiation and has not yet been finalised.
US Trade Representative Jamieson Greer described the Bangladesh agreement as the first completed reciprocal trade deal between the US and a South Asian nation, calling it “a meaningful step forward in opening markets, addressing trade barriers, and creating new opportunities for American exporters.”
Impact on Bangladesh’s Economy
The ready-made garments sector remains the backbone of Bangladesh’s economy, accounting for over 80 per cent of export earnings, employing around 4 million workers, and contributing nearly 10 per cent of GDP.
Under the tariff schedules released by the USTR, Bangladesh will eliminate duties on several agricultural and food products — including poultry, pork, seafood, rice, corn, and cereal grains — once the agreement takes effect.
Other tariffs will be cut by 50 per cent initially and phased out over five or ten years. For example:
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The 53.6 per cent duty on almonds will be reduced to zero over 10 years
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The same duty on four-stroke auto rickshaw engines will be eliminated within five years
Most US tariffs will be standardised at 19 per cent, while Bangladeshi pharmaceutical ingredients and aircraft parts will remain duty-free, consistent with exemptions granted to other US trade partners.
The agreement comes just days before Bangladesh heads to the polls on Thursday, marking its first election since the country has been governed by an interim administration following the departure of former Prime Minister Sheikh Hasina in August 2024.
