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US and Bangladesh strike landmark trade agreement
Washington and Dhaka unveiled a new trade pact on Monday, reducing US tariffs on Bangladeshi goods and expanding market access for American products in the South Asian nation. The deal includes exemptions for select apparel and textile exports made with US-sourced materials.
Key terms of the agreement
The United States will lower its tariff on Bangladeshi imports from 20% to 19%, aligning the rate more closely with regional competitors. In return, Bangladesh will open its markets to a broader range of American goods, including chemicals, medical devices, automotive parts, soy products, and meat.
The White House stated the agreement would provide both nations with "unprecedented access" to each other's markets, strengthening economic ties.
Textile sector gains tariff exemptions
Under the deal, certain Bangladeshi clothing and textile products-particularly those using US-produced cotton and man-made fibers-will enter the US market duty-free. The volume of these exemptions will depend on the amount of US textiles exported to Bangladesh.
The apparel industry is vital to Bangladesh's economy, generating over 80% of its export revenue and employing approximately four million workers. The country is the world's second-largest exporter of garments, trailing only China.
Bangladesh commits to labor and environmental standards
As part of the agreement, Dhaka pledged to recognize US food, drug, and vehicle safety regulations, simplifying the entry of American goods. The Bangladeshi government also agreed to uphold internationally recognized labor rights, enhance environmental protections, and honor existing contracts to purchase billions of dollars in US agricultural, aircraft, and energy products.
Trade tensions and regional competition
The deal follows prolonged negotiations between the two nations after former US President Donald Trump imposed sweeping tariffs on global trading partners in April 2025. Bangladesh initially faced a 37% US tariff, while neighboring India-its primary regional rival-was subject to a 25% levy. The new 19% rate for Bangladesh nearly matches India's current 18% tariff.
Both countries compete in key export sectors, including apparel, footwear, and agricultural products.
Political context ahead of elections
The agreement was announced days before Bangladesh's general elections on Thursday. The country has been governed by an interim administration since 2024, following the ouster of former Prime Minister Sheikh Hasina amid deadly protests led by students.
The Bangladeshi government has not yet responded to requests for comment.
