Dhaka: In a significant boost to its beleaguered garment sector, Bangladesh has secured a landmark trade agreement with the United States, slashing reciprocal tariffs on its exports to 19% and opening the door to duty-free access for select apparel made with American raw materials.
The deal, signed on Monday after nine months of intense negotiations starting in April last year, marks a further reduction from the 20% rate set in August 2025 and a sharp drop from the initially proposed 37%. Interim government Chief Adviser Muhammad Yunus hailed the pact as a major win for job preservation, noting that garments using US-produced cotton and man-made fibres will qualify for zero reciprocal tariffs under a new mechanism. Bangladesh’s purchases of US textile inputs will determine the volume of such duty-free imports.
The ready-made garment (RMG) industry, which employs over 4 million workers, mostly women from rural areas, and accounts for more than 80% of the country’s export earnings and around 10% of GDP, stands to gain the most.
Exporters have faced mounting pressures from rising costs, energy prices, currency issues, and buyer demands recently.
Bangladesh’s Commerce Adviser Sheikh Bashir Uddin and National Security Adviser Khalilur Rahman signed on behalf of Dhaka, while US Trade Representative Jamison Greer represented Washington. Greer praised the Bangladeshi team’s efforts, stating the agreement would strengthen Dhaka’s position in US trade policy. In exchange, Bangladesh has committed to providing preferential market access to a range of American goods, including chemicals, machinery, agricultural products, and energy items, while both sides aim to eliminate non-tariff barriers.
The timing is crucial, coming just days before Bangladesh’s general elections amid efforts by the interim administration to showcase economic stability following political upheaval since August 2023.
Industry leaders view the pact as vital relief, enhancing competitiveness in the crucial US market and supporting recovery for factories nationwide.