Bangladesh US tariff deal explained: Why a 19% rate matters for apparel, jobs and trade as Washington reworks market access

Bangladesh has secured a reduced 19 per cent tariff rate on exports to the United States under a reciprocal trade agreement signed by the two countries on Monday. The deal includes exemptions for certain textile and garment products manufactured using US-origin cotton and man-made fibres, offering targeted relief to Bangladesh’s export-heavy apparel sector.

Muhammad Yunus, chief adviser to Bangladesh’s interim government, said Washington had committed to establishing a mechanism that would allow selected Bangladeshi apparel and textile goods produced with US materials to enter the American market at zero reciprocal tariff. The arrangement follows months of negotiations aimed at easing trade barriers between the two sides.

The White House said the agreement provides significant preferential market access for US industrial and agricultural products in Bangladesh. These include chemicals, medical devices, machinery, motor vehicles and parts, soy products, dairy items, beef, poultry, tree nuts and fruit.

Bangladesh has also agreed to relax several non-tariff barriers. According to US officials, Dhaka will accept US vehicle safety and emissions standards, recognise certifications issued by the US Food and Drug Administration, and lift import restrictions on remanufactured goods.

The deal outlines measures intended to improve regulatory alignment and reduce friction in bilateral trade, particularly in sectors where access has historically been limited by differing standards.

Both sides highlighted recent and planned commercial transactions linked to the agreement. These include aircraft procurement, approximately $3.5 billion in purchases of US agricultural goods, and an estimated $15 billion in imports of US energy products over a 15-year period.

According to the 32-page agreement released by the Office of the US Trade Representative, Biman Bangladesh Airlines plans to purchase 14 Boeing aircraft, with options for additional orders. The airline first announced its intention to buy Boeing jets last July while trade negotiations were ongoing.

Bangladesh will also acquire an unspecified quantity of US military equipment and reduce defence purchases from certain countries, according to the agreement.

Bangladesh committed to upholding internationally recognised labour rights and strengthening environmental safeguards as part of the deal. Yunus said the agreement followed nine months of negotiations that began in April last year.

In August, Bangladesh had already secured a reduction in US tariffs on its exports to 20 per cent, down from the 37 per cent initially proposed by Washington, providing interim relief to apparel exporters.

Under tariff schedules released by the USTR, Bangladesh will reduce high duties to zero on several farm and food products, including poultry, pork, seafood, rice, corn and cereal grains, once the agreement takes effect.

Other tariffs will be cut by 50 per cent initially and then phased down to zero over five or ten years, depending on the product. For example, the current 53.6 per cent duty on almonds will be eliminated over a decade, while the same rate on four-stroke auto rickshaw engines will be removed within five years.

Bangladesh’s 19 per cent tariff rate is slightly higher than the 18 per cent rate agreed for imports from India last week under a separate arrangement with the Trump administration, though that deal still requires further negotiations before being finalised.

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

The ready-made garments sector remains central to Bangladesh’s economy, accounting for more than 80 per cent of export earnings, employing around four million workers, and contributing roughly 10 per cent to gross domestic product.

Bangladesh is set to hold elections on Thursday after being governed by an interim administration since August 2024, when former Prime Minister Sheikh Hasina fled to India.

Most US tariffs under the agreement will be set at a flat 19 per cent. However, Bangladeshi-made pharmaceutical ingredients and aircraft parts will be exempt from duties, in line with treatment extended to other countries that have signed tariff-reduction deals with the Trump administration.