Dhaka and Washington Ink Landmark Trade Accord

In a significant recalibration of bilateral economic relations, Bangladesh and the United States officially signed a comprehensive trade agreement at 10:00 pm (Bangladesh Standard Time) on Monday. The accord, signed via a high-level virtual ceremony, marks a pivotal moment for the Bangladeshi garment sector, securing a reduction in reciprocal tariffs and establishing a "duty-free" pathway for products manufactured using American raw materials.

Tariff Reductions and Strategic Exemptions

The cornerstone of the agreement is a 1% reduction in the reciprocal tariffs imposed on Bangladeshi exports. This adjustment lowers the specific reciprocal duty from 20% to 19%. While this marginal decrease is welcomed, the more transformative clause pertains to the use of American inputs.

Under the new terms, Readymade Garments (RMG) produced in Bangladesh using US-sourced cotton or synthetic fibres will be entirely exempt from reciprocal tariffs. This "zero-duty" status on American-material products is expected to incentivise Bangladeshi manufacturers to pivot their supply chains toward the United States, thereby narrowing the trade deficit that Washington has long sought to address.

High-Level Virtual Signing

The agreement was formalised by Bangladesh’s Commerce Adviser, Sheikh Bashiruddin, and the United States Trade Representative, Jamison Greer. Although the signing took place in Washington D.C., the Bangladeshi leadership, including National Security Adviser Khalilur Rahman, Commerce Secretary Mahbubur Rahman, and the Chief Adviser’s Special Assistant Lutfey Siddiqui, participated virtually from Dhaka.

A five-member technical delegation, led by Additional Secretary Khadija Nazneen and including officials from the National Board of Revenue (NBR), was physically present in the US capital to facilitate the proceedings.

The Evolving Tariff Landscape: A Timeline

The journey to this 19% rate has been marked by intense diplomatic negotiation following President Donald Trump's sweeping tariff proclamations in early 2025.

Note: These reciprocal duties are applied in addition to the standard 15% export duty, bringing the total current effective tariff for standard Bangladeshi goods to 34%.

Industry Optimism vs. Expert Caution

Leading exporters have hailed the move as a masterstroke for market access. A.K. Azad, Managing Director of Ha-Meem Group—one of the largest exporters to the US—expressed immense satisfaction. "We already import significant quantities of US cotton. This exemption will allow us to scale up our exports exponentially by leveraging US raw materials to bypass the tariff barriers," he remarked.

However, the "wait-and-see" approach remains prevalent among policy analysts. Professor Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD), raised concerns regarding the timing and the "hidden costs" of the deal.

"While the concessions appear positive, we remain in the dark regarding the underlying conditions Bangladesh must fulfil in return. Such a significant commitment during the tenure of an interim government places a heavy burden of compliance on the succeeding administration," he cautioned.

Balancing the Trade Deficit

The bilateral trade volume currently stands at $8 billion, with Bangladesh enjoying a surplus—exporting $6 billion while importing only $2 billion. To appease Washington’s "fair trade" agenda, Dhaka has recently increased its procurement of American wheat, soybean oil, maize, and LNG, alongside Boeing aircraft and components. This new agreement solidifies this trend, effectively linking market access for Bangladeshi shirts to the purchase of American cotton.

The Ministry of Commerce is scheduled to hold a comprehensive press briefing tomorrow at 2:30 pm to disclose the full technical specifics and conditionality of the pact.