US cuts Bangladesh tariff to 19%, no duty on RMG made of US cotton
The United States has reduced the reciprocal tariff on Bangladeshi exports to 19%, following the signing of a new bilateral trade agreement. The deal, finalized on February 9, also includes a provision granting duty-free access for Bangladesh's Ready-Made Garments (RMG) made using US-imported cotton and synthetic fibers.
The agreement was officially signed by Commerce Adviser Sk Bashir Uddin of Bangladesh and US Trade Representative Jamieson Greer in Washington, with several senior Bangladeshi officials joining the ceremony virtually from Dhaka, including National Security Adviser Khalilur Rahman. The deal aims to foster stronger trade relations between the two nations, with a focus on textiles and strategic goods.
The new tariff rate places Bangladesh in a more competitive position within the US apparel market. Although Vietnam faces a 20% tariff, Bangladesh will benefit from a slightly lower 19% rate, while India has secured an even lower 18%. Other countries like Pakistan, Cambodia, and Indonesia also face a 19% tariff. China remains the largest apparel exporter to the US, with Bangladesh holding third place.
The reduction follows the imposition of a 20% reciprocal tariff by the US on Bangladeshi goods in August 2022. This prompted the government in bangladesh to push for a tariff reduction. Analysts suggest that Bangladesh's ability to negotiate effectively may have been influenced by the broader geopolitical context, including the US-India trade deal.
Beyond tariff adjustments, the agreement includes provisions for the importation of key US goods, such as cotton, wheat, and LNG. Bangladesh also agreed to purchase 25 Boeing aircraft, valued at around Tk30,000-35,000 crore, in an effort to deepen trade ties and ease diplomatic tensions. The deal also commits Bangladesh to comply with US intellectual property standards and support US-backed reforms in the World Trade Organization (WTO).
The US remains Bangladesh's largest export market. Last fiscal year, Bangladesh exported goods worth $8.69 billion to the US, with woven garments, knitwear, home textiles, and caps making up significant portions of these exports. Furthermore, Bangladesh imported $346 million worth of US cotton in FY25, reflecting a growing trade in textiles.
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