US cuts Bangladesh tariffs to 19% in new deal; exempts select goods from reciprocal tax

Bangladesh has secured a reduced 19 per cent US tariff under a trade agreement signed by the two countries on Monday, with exemptions for select textiles and garments made using US-origin materials.

Muhammad Yunus, chief adviser to Bangladesh’s interim government, said Washington had committed to creating a mechanism allowing certain Bangladeshi apparel products manufactured with US cotton and man-made fibre to enter the American market at zero reciprocal tariff.

In a statement, the White House said Bangladesh agreed to provide significant preferential market access to US industrial and agricultural goods, including chemicals, medical devices, machinery, motor vehicles and parts, soy products, dairy, beef, poultry, tree nuts and fruit.

Bangladesh will also ease non-tariff barriers by accepting US vehicle safety and emissions standards, recognising US Food and Drug Administration certifications, and lifting restrictions on remanufactured goods, it said.

Bangladesh to boost US purchases

The agreement highlights recent and planned commercial deals, including aircraft procurement, about $3.5 billion in purchases of US agricultural products, and an estimated $15 billion in US energy imports over the next 15 years.

According to the 32-page agreement released by the Office of the US Trade Representative (USTR), Biman Bangladesh Airlines plans to buy 14 Boeing aircraft, with options for additional orders. The carrier had first disclosed the Boeing purchase last July as negotiations were underway.

Bangladesh will also acquire an unspecified amount of US military equipment and reduce purchases from certain countries. The country further pledged to uphold internationally recognised labour rights and strengthen environmental protections.

Yunus said the agreement followed nine months of negotiations that began in April last year. In August, Bangladesh had already secured a tariff cut to 20 per cent from the 37 per cent initially proposed by Washington, offering relief to its apparel exporters.

India still negotiating

Bangladesh’s tariff rate is marginally higher than the 18 per cent rate agreed last week for imports from India under a separate arrangement with the Trump administration, which still requires further negotiations before finalisation.

US Trade Representative Jamieson Greer said Bangladesh is the first South Asian nation to conclude a reciprocal trade deal with the United States, calling it “a meaningful step forward in opening markets, addressing trade barriers, and creating new opportunities for American exporters.”

The ready-made garments sector underpins Bangladesh’s economy, accounting for more than 80 per cent of export earnings, employing about 4 million workers, and contributing roughly 10 per cent to GDP.

Bangladesh goes to the polls on Thursday following months of rule by an interim government after former prime minister Sheikh Hasina fled to India in August 2024.

Under tariff schedules released by the USTR, Bangladesh will cut duties to zero on several agricultural and food products — including poultry, pork, seafood, rice, corn and cereal grains — once the agreement takes effect. Other tariffs will be reduced by 50 per cent initially and phased out over five or 10 years.

Most US tariffs will be set at a flat 19 per cent, though Bangladeshi pharmaceutical ingredients and aircraft parts will be duty-free, in line with exemptions granted to other countries that have reached tariff-reduction agreements with the Trump administration.