Tariff Reduction Agreement
In a move that could significantly benefit Bangladesh's economy, particularly its dominant garment sector, a reciprocal tariff agreement was finalized
with the United States. This accord, reached after extensive negotiations spanning nine months since April of the previous year, marks a substantial reduction in the tariffs imposed by the US on goods originating from Bangladesh. The agreement specifically lowers the reciprocal tariff rate from 20% down to 19%. It's important to note the context of previous tariff adjustments; the Trump administration had initially imposed a 37% tariff on Bangladeshi goods in April 2025, which was later adjusted downwards to 35% and subsequently to 20% by August, prior to this latest development. The finalization of this deal, just a few days before the scheduled February 12 national elections, is being heralded as a positive outcome for trade relations between the two nations and a potential boon for exporters.
Textile Sector Advantages
Beyond the general tariff reduction, this new agreement introduces preferential treatment for specific categories within the textile and apparel industry. The pact establishes a framework for zero reciprocal tariffs on select textile and apparel items that are manufactured using either US cotton or man-made fibers. This provision is particularly significant for Bangladesh's garment manufacturers, who are major global players. Commerce Adviser Sheikh Bashir Uddin described this as a "historic step," emphasizing its potential to unlock larger markets for both Bangladesh and the United States. The introduction of zero tariffs on these specific categories aims to incentivize the use of US raw materials while simultaneously making Bangladeshi finished products more competitive in the US market, thereby creating a mutually beneficial trade environment and providing a substantial boost to the country's vital garment export industry.
Economic Implications
The signing of this tariff deal holds considerable economic weight for Bangladesh, especially in the lead-up to its national elections. National Security Adviser Khalilur Rahman, who spearheaded the negotiation efforts, indicated that these changes are poised to provide significant advantages to exporters and offer a much-needed uplift to the nation's garment sector, which accounts for a staggering 95% of Bangladesh's exports to the US. The Council of Advisers has officially approved the agreement, and it is set to be implemented once both parties issue the necessary notifications. This development is viewed positively by officials, who anticipate it will generate more jobs and foster economic growth. With election campaigning concluding, the incoming government, regardless of its political affiliation, is expected to benefit from this favorable trade pact, which could provide a key competitive edge in the highly lucrative US apparel market.
