Bangladesh Secures Reduced 19% U.S. Tariff in Landmark Trade Agreement

Bangladesh has secured a reduced 19% U.S. tariff under a new reciprocal trade agreement signed with the United States, marking a significant development for the country’s export-driven economy, particularly its vital garments and textiles sector. The agreement, finalized after nine months of negotiations, provides tariff relief and grants exemptions for certain textile and apparel products manufactured using U.S.-produced cotton and man-made fibers.

Chief Adviser Muhammad Yunus, who heads Bangladesh’s interim government, said the United States has committed to establishing a mechanism that would allow specific Bangladeshi textile and apparel goods made with U.S. raw materials to enter the American market with zero reciprocal tariffs. This move is expected to strengthen bilateral trade ties and support Bangladesh’s apparel exporters, who were previously facing much higher proposed duties.

In exchange, Bangladesh has agreed to provide significant preferential market access for U.S. industrial and agricultural products. These include chemicals, medical devices, machinery, motor vehicles and parts, soy products, dairy goods, beef, poultry, tree nuts, and fruits. Bangladesh will also reduce non-tariff barriers by accepting U.S. vehicle safety and emissions standards, recognizing U.S. Food and Drug Administration certifications, and removing restrictions on remanufactured goods.

The agreement outlines major commercial commitments, including approximately $3.5 billion in U.S. agricultural purchases and an estimated $15 billion in U.S. energy imports over the next 15 years. Biman Bangladesh Airlines also plans to purchase 14 Boeing aircraft, with options for additional orders, while Bangladesh has agreed to buy an unspecified amount of U.S. military equipment.

Bangladesh has pledged to uphold internationally recognized labor rights and strengthen environmental protections under the deal. According to tariff schedules released by the U.S. Trade Representative, Bangladesh will eliminate tariffs on many farm and food products immediately, while others will be reduced gradually over five to ten years.

The ready-made garments industry, which accounts for more than 80% of Bangladesh’s export earnings and employs around 4 million workers, stands to benefit significantly from the reduced U.S. tariffs. The agreement comes as Bangladesh prepares for national elections, following governance by an interim administration since August 2024.