US Eases Trade Terms for Bangladesh with 1% Tariff Cut; Lowers Tariffs On Garments And Textiles

The United States and Bangladesh announce a new trade understanding that slightly lowers US import duties and opens a path to selective tariff-free access for some textiles and garments. The arrangement targets products from the world's second-largest garment exporter, while also tying benefits to the use of American raw materials in Bangladesh factories.

Under the joint plan, the administration of President Donald Trump cuts US “reciprocal” tariffs on Bangladeshi goods from 20 percent to 19 percent. A joint statement from the White House confirms the change, which adjusts a duty regime introduced earlier to counter what Washington described as unfair trading conditions.

US tariffs on Bangladesh goods and textile sector impact

Textiles and garments account for about 80 percent of Bangladesh’s total exports, and the sector is still recovering after a student-led revolution in 2024 that removed the previous government. Against that backdrop, Washington now “commits to establish a mechanism that will allow for certain textile and apparel goods from Bangladesh to receive a zero reciprocal tariff rate.”

The zero-tariff access does not apply to all shipments. Instead, specific volumes of textile and apparel imports into the United States can receive the preferential rate. Those quantities will depend on how much American-made textile inputs Bangladesh buys, including US-produced cotton and man-made fibre materials used in its factories.

US tariffs on Bangladesh goods and new reciprocal mechanism

The “reciprocal” tariffs were first imposed by Donald Trump last year, as part of a wider effort to rework trade relationships with many economies. Bangladesh was initially hit with a 37 percent tariff rate on its exports to the United States. That rate dropped to 20 percent in August, before the latest adjustment to 19 percent under the new agreement.

US officials and their Bangladeshi counterparts also plan to look beyond garments. The White House statement notes that the United States will identify additional Bangladeshi products that could qualify for a zero percent “reciprocal” tariff. The categories have not been listed yet, but are expected to sit alongside the textile-focused mechanism.

The deal is already signed and will start operating after both governments complete their formal notification procedures. Muhammad Yunus, who heads Bangladesh’s interim government, shares on social media that the agreement was concluded on Monday and explains that technical steps now follow before businesses can claim the new rates.

US tariffs on Bangladesh goods and wider trade ties

Bangladesh’s National Security Adviser Khalilur Rahman emphasises the expected benefit from pairing US inputs with garment exports. According to the statement, Khalilur Rahman says the planned exemptions for those textile and apparel products “will give substantial added impetus to our garments sector.” Officials present the arrangement as a link between American raw materials and Bangladeshi manufacturing jobs.

The existing trade relationship is already large and uneven. Bangladesh exported about $8.4 billion worth of goods to the United States in 2024, while Bangladesh’s imports from the United States reached $2.2 billion. Data from Bangladesh Bank and the National Board of Revenue show the scale of the gap, which the reciprocal tariff framework aims to address.

Trade flow	Value in 2024 (US$ billion)
Bangladesh exports to United States	8.4
Bangladesh imports from United States	2.2

Many well-known American clothing companies already buy from Bangladeshi suppliers. The list runs from Fruit of the Loom and Levi Strauss to VF Corp, whose portfolio includes Vans, Timberland and The North Face. Their sourcing decisions are expected to shape how strongly the new duty cuts and quota-linked exemptions influence investment across Bangladesh’s garments industry.

For both governments, the agreement links modest tariff relief with conditions tied to trade balance, raw material sourcing and sector recovery. The step reduces headline duties on Bangladeshi products, creates limited space for zero “reciprocal” tariffs, and signals that further product lines may follow once the initial mechanism becomes fully operational.

FAQs

What is the new trade understanding between the United States and Bangladesh about?

It is an agreement that slightly lowers US import duties and creates a path to selective tariff-free access for some textiles and garments, tying benefits to the use of American raw materials in Bangladesh factories.

How have US tariffs on Bangladeshi goods changed under the arrangement?

US reciprocal tariffs on Bangladeshi goods were reduced from 20% to 19% as part of the latest adjustment.

What is the zero-reciprocal tariff mechanism and who qualifies?

The mechanism allows certain textile and apparel imports from Bangladesh to receive a zero reciprocal tariff, but only for specific volumes that depend on how much US-made textile inputs Bangladesh uses.

Does the agreement apply to all Bangladeshi shipments, and what broader goals does it aim to achieve?

No, the zero-tariff access is limited by volume and input sourcing; the arrangement seeks to support Bangladesh’s garment sector, reduce the tariff gap, and link relief to trade balance and raw material sourcing.

Who are some major buyers of Bangladeshi garments, and why are they relevant to the deal?

American brands like Fruit of the Loom, Levi Strauss, and VF Corp. source from Bangladesh, and their purchasing decisions are expected to influence how the duty cuts and exemptions impact investment in the Bangladeshi garments industry.