Hope for further tariff cuts as cotton, soybean, fuel imports from US rising
Bangladesh and United States will sign a trade agreement this month, says the adviser
Highlights:
- Washington expresses satisfaction with recent decline in Bangladesh-US trade deficit
- Bangladesh and the US expected to sign a bilateral trade agreement this month
- Talks focused on gradual tariff reductions, not a specific cut to 15%, Bashir clarifies
- Three-day US visit aims to finalise trade deal, with draft agreement already prepared.
As Bangladesh steps up imports of cotton, wheat, soybeans and energy from the United States, Dhaka expects further relief from the 20% reciprocal tariff – an opening that could reshape the country's trade balance and competitiveness in its largest export market.
Commerce Adviser Sk Bashir Uddin today (14 September) said the US has assured that it may reduce the 20% reciprocal duty currently imposed if Bangladesh continues to narrow its trade deficit with it.
"Washington has expressed satisfaction with the recent decline in the deficit," he told the media following a meeting in Dhaka yesterday with a visiting United States Trade Representative (USTR) delegation.
Keep updated, follow The Business Standard's Google news channel
Bashir added that no specific duty rate had been formally discussed during the talks. "We proposed reducing duties if the trade deficit with the US declines. They have given assurances that duties will be lowered when this happens. A trade agreement could be signed within this month," he said.
Commerce ministry officials said competitor countries such as Vietnam are negotiating lower tariffs on ready-made garments exported to the US. India has also resumed trade talks with Washington.
Against this backdrop, Bangladesh aims to secure favourable conditions to maintain competitiveness in the US market, they added.
A senior official, speaking on condition of anonymity, told The Business Standard, "The duty on Bangladesh could be reduced, possibly to around 18%. The USTR will make a final decision after discussions with the foreign adviser and the chief adviser."
The US delegation is led by Assistant USTR for South and Central Asia Brendan Lynch and attended by Bashir Uddin, National Security Adviser Khalilur Rahman, and Commerce Secretary Mahbubur Rahman.
The USTR delegation is scheduled to meet representatives of BGMEA today.
BGMEA President Mahmud Hasan Khan told The Business Standard that, in view of increased cotton imports from the US, a proposal will be made to reduce the tariff on Bangladesh from 20% to 15% or lower.
"To secure further duty reductions, we will increase imports of cotton and other products. We will also ensure compliance with US requirements on labour rights and welfare," he said.
Narrowing deficit
Adviser Bashir Uddin at the briefing said discussions with USTR also reviewed the progress of Bangladesh's commitments to import specific US products, alongside a joint declaration on trade matters.
The review showed Bangladesh's trade deficit with the US is decreasing, he said.
"Increasing imports of agricultural and energy products will further reduce this deficit. Bangladesh is currently importing these products from the US at prices lower than international market rates. He noted that the extra tariffs imposed by China on US agricultural products are giving Bangladesh this advantage," he said.
The adviser further said, "Our progress is satisfactory. By importing US cotton used in the garment industry, we can further reduce the deficit and, in turn, the duties imposed on Bangladesh," Bashir Uddin said.
Commerce Secretary Mahbubur Rahman added that Bangladesh's trade deficit with the US currently stands at $6 billion.
He said the deficit could be reduced significantly by boosting US imports, citing that last year's cotton imports were valued at $600 million, while $276 million worth has already been imported in just the first two months of this fiscal.
When asked about Russia offering wheat to Bangladesh at $276 million while a US wheat deal is at $302 per million, Bashir Uddin said, "US wheat protein content is 10%–15% higher than Russian wheat. So buying less at a higher price from the US is justified."
He added, "The private sector has already imported 1 million tonnes of soybeans from the US. While the price is slightly higher, the quality and oil yield are greater, making it profitable despite the higher cost."
When asked if the government has any plan for Boeing imports from the US, the adviser said no plan has been made yet.
"Boeing and Airbus cannot deliver aircraft until 2032. Long-term Boeing imports could help reduce the trade deficit with the US," he said.
The adviser said Bangladesh produces only 2% of its cotton demand domestically, importing the remaining 98%, with private sector imports from the US increasing.
Ministry data show that imports of soybeans and soybean meal from the US have already surpassed $450 million this year, up from $348.9 million in 2024.
In July, the government's procurement committee approved a proposal to import LNG worth Tk600 crore from the US. Besides, The food ministry signed a contract to import 150,000 tonnes of wheat.
Additionally, the government has also approved a proposal to import ships from the US. Bangladesh Shipping Corporation in August selected a US-based company, Hellenic Dry Bulk Ventures LLC, to purchase two bulk carriers for $76.698 million, equivalent to Tk935 crore.
Eyeing for 15% tariff
BKMEA President Mohammad Hatem told The Business Standard that Bashir Uddin had earlier indicated efforts to reduce US duties to 15%, which would stimulate cotton imports and boost ready-made garment exports.
He said, "If this preferential treatment is ensured, Bangladesh could import substantial amounts of cotton from the US and expand exports, creating a win-win scenario for both countries."
Earlier, the commerce adviser and national security adviser told reporters that discussions with the US on a 15% reciprocal duty were ongoing.
The US Embassy in Dhaka had been engaged in talks for nearly six weeks, culminating in a three-day visit by the USTR delegation.
Meetings with the foreign adviser and the chief adviser are scheduled today and tomorrow.
Officials said that on 7 August, the US reduced the retaliatory tariff on Bangladesh to 20%, though no formal agreement has been signed. Dhaka seeks to lower the tariff to at least 15% before finalising a deal with Washington.
For this reason, the commerce ministry requested time from the USTR, prompting the visit by the delegation led by Assistant USTR Brendan Lynch.
Officials added that based on discussions with USTR officials, a draft trade agreement has been prepared. If both sides agree in further negotiations, revisions will be made to finalise the draft.
The US initially imposed 37% and later 35% retaliatory tariffs on Bangladesh, leaving room for negotiations under former President Donald Trump. After the third round of talks in Washington, the tariff was reduced to 20% on 31 July.
