US cuts Bangladesh’s reciprocal tariff to 19% under new trade deal

The US has reduced the reciprocal tariff on Bangladeshi exports to 19% following the signing of a bilateral trade agreement in Washington, said a senior official of the Ministry of Commerce tonight. 

Commerce Secretary Mahbubur Rahman told The Business Standard that Commerce Adviser Sk Bashir Uddin and US Trade Representative (USTR) Jamieson Greer signed the agreement on behalf of the respective country in Washington around 10pm Bangladesh time today (9 February). 

The revised tariff rate places Bangladesh in a relatively competitive position among major apparel exporters to the US. While Vietnam, Bangladesh’s closest competitor, faces a 20% reciprocal tariff, India has secured a slightly lower rate of 18%. Pakistan, Cambodia and Indonesia have also been subjected to a 19% tariff. 

China remains the largest apparel exporter to the US, followed by Vietnam. Bangladesh currently holds the third position, with India ranking fourth.

Since August last year, the US had been imposing a 20% reciprocal tariff on Bangladeshi goods, prompting Dhaka to negotiate to secure a reduction. Although policymakers had earlier indicated that the tariff could be brought down to 15%, it finally missed.  

The commerce secretary said the US has not offered a 15% reciprocal tariff to any country in the region, adding that the recently concluded US-India trade deal may have influenced Bangladesh’s outcome, possibly due to geopolitical considerations.

Former WTO Cell director general at the Ministry of Commerce Md Hafizur Rahman said India benefited from greater flexibility in negotiations with the US because of its free trade agreement with the European Union. However, he downplayed concerns over Bangladesh’s competitiveness.

“Even with a 19% tariff, Bangladesh will not face difficulties competing with India in the US apparel market,” he told TBS, citing Bangladesh’s lower labour costs and production expenses.

In addition to tariff adjustments, the agreement includes several trade and strategic commitments. The US will allow duty-free access for garments manufactured in Bangladesh using imported US cotton, potentially benefiting both countries’ textile supply chains.

The commerce adviser said Bangladesh has also agreed to purchase 25 aircraft from US aerospace giant Boeing, with an estimated cost of Tk30,000-35,000 crore, as part of broader efforts to ease trade tensions.

The deal further includes provisions for importing cotton, wheat, soybean and LNG from the US at higher prices, refraining from imposing tariffs on e-commerce, complying with US-mandated intellectual property rights standards, and supporting US proposals for reforming the World Trade Organization.

The government is expected to formally brief the public on the agreement through a press conference today.