US cuts Bangladesh tariff to 19%, no duty on RMG made of US cotton

The US has reduced the reciprocal tariff on Bangladeshi exports to 19% following the signing of a bilateral trade agreement under which Bangladesh RMG exports made of cotton and synthetic fibers imported from America will enjoy zero reciprocal duty, Commerce Secretary Mahbubur Rahman said today (9 February).

Commerce Adviser Sk Bashir Uddin and US Trade Representative (USTR) Jamieson Greer signed the agreement on behalf of the respective country in Washington around 10pm Bangladesh time today, the commerce secretary told The Business Standard.

Khalilur Rahman, national security adviser, Lutfey Siddiqi, special envoy of Chief Adviser Muhammad Yunus, and the commerce adviser virtually joined the signing ceremony from Bangladesh.

The revised tariff rate places Bangladesh in a relatively competitive position among major apparel exporters to the US. While Vietnam, Bangladesh's closest competitor, faces a 20% reciprocal tariff, India has secured a slightly lower rate of 18%. Pakistan, Cambodia and Indonesia have also been subjected to a 19% tariff.

China remains the largest apparel exporter to the US, followed by Vietnam. Bangladesh currently holds the third position, with India ranking fourth.

The US had imposed a 20% reciprocal tariff on Bangladeshi goods in August last year, prompting Dhaka to negotiate to secure a reduction. Policymakers had earlier indicated that the tariff could be brought down to 15%.

The commerce secretary said the US has not offered a 15% reciprocal tariff to any country in the region, adding that the recently concluded US-India trade deal may have influenced Bangladesh's outcome, possibly due to geopolitical considerations.

Former WTO Cell director general at the commerce ministry Md Hafizur Rahman said India benefited from greater flexibility in negotiations with the US because of its free trade agreement with the European Union. However, he downplayed concerns over Bangladesh's competitiveness.

"Even with a 19% tariff, Bangladesh will not face difficulties competing with India in the US apparel market," he told TBS, citing Bangladesh's lower labour costs and production expenses.

In addition to tariff adjustments, the agreement includes several trade and strategic commitments. The US will allow duty-free access for garments manufactured in Bangladesh using imported US cotton, potentially benefiting both countries' textile supply chains.

The commerce adviser said Bangladesh has also agreed to purchase 25 aircraft from US aerospace giant Boeing, with an estimated cost of Tk30,000-35,000 crore as part of broader efforts to ease trade tensions.

The deal further includes provisions for importing cotton, wheat, soybean and LNG from the US, refraining from imposing tariffs on e-commerce, complying with US-mandated intellectual property rights standards, and supporting US proposals for reforming the World Trade Organization.

The government is expected to formally brief the public on the agreement through a press conference tomorrow.

According to the Export Promotion Bureau, the US remains Bangladesh's largest export market.

Last fiscal year, exports to the US amounted to $8.69 billion, including $4.95 billion in woven garments (27.21% of total woven exports) and $2.60 billion in knitwear (12.27% of total knitwear exports). Home textiles exports reached $150 million, while cap exports stood at $259 million.

According to the Bangladesh Textile Mills Association, Bangladesh imported $346 million worth of US cotton in FY25, up from $278 million in the previous FY. US cotton accounted for 10% of Bangladesh's total cotton imports last fiscal year.

In July last year, the Trump administration proposed an additional 35% reciprocal tariff on Bangladesh, along with 90 other countries.

Subsequently, after several rounds of negotiations covering 100 US products, duty-free access, and increased imports, Washington reduced Bangladesh's reciprocal tariff rate to 20%, effective from 1 August.