BD to sign trade deal with US aimed at cutting tariffs and boosting garment exports

Bangladesh is set to sign a trade agreement with the United States tomorrow designed to reduce reciprocal tariffs and ease pressure on its export sector, particularly the garment industry. The deal will include commitments from Bangladesh to increase imports of American goods to help narrow the significant trade gap between the two countries.

According to Commerce Secretary Mahbubur Rahman, garments made with American raw materials such as cotton and exported to the US will be exempt from tariffs on the portion made from US inputs. The Trump administration is also expected to further reduce reciprocal tariff rates on Bangladeshi exports, although exact figures have not been disclosed.

The agreement could provide major relief to Bangladesh’s garment sector, which accounts for nearly 95 percent of its exports to the US. For example, if a T-shirt contains about 70 percent American cotton and yarn by value, that portion would be exempt from the 20 percent tariff currently applied to Bangladeshi goods.

The prospect of tariff benefits has already influenced sourcing decisions, with Bangladesh increasing imports of American cotton and soybeans as manufacturers adjust supply chains.

The signing ceremony will take place on 9 February in a hybrid format, with senior commerce ministry officials attending in Washington while Commerce Adviser Sk Bashir Uddin and Secretary Rahman will join virtually due to the upcoming national elections scheduled for February 12.

The agreement follows months of negotiations aimed at reducing the US tariff burden. Bangladesh exports more than $8 billion in goods annually to the US but imports only around $2 billion, creating a large trade imbalance. Last year, the US imposed a 37 percent additive reciprocal tariff on Bangladeshi exports, later reduced to 20 percent after Bangladesh pledged to increase purchases of American products.

Under the deal, Bangladesh has committed to buying US aircraft from Boeing and increasing imports of cotton, soybeans, liquefied petroleum gas, and other goods. A separate agreement has also been signed to import 3.5 million tonnes of American wheat over five years, with about 660,000 tonnes already purchased.

The Bangladesh Garment Manufacturers and Exporters Association said negotiations with the US Trade Representative have been ongoing for more than six months and urged authorities to complete the signing promptly so the industry can prepare to take advantage of preferential tariff access through the use of American cotton.