New Delhi: The US and Bangladesh have announced an agreement on reciprocal tariffs, which will see merchandise exports from Dhaka to America tariffed at 19 percent, while establishing a carve out textiles and apparels using American cotton.
“The US will further reduce the reciprocal tariff to 19 percent, which was originally set at 37 percent and later reduced to 20 percent in August last year. In addition, the US committed to establishing a mechanism for certain textile and apparel goods from Bangladesh using US produced cotton and man-made fiber to receive zero reciprocal tariff in the US market,” the Chief Adviser Muhammad Yunus’ office said Monday in a statement on the social media platform X.
The agreement comes after nearly nine months of negotiations between Dhaka and Washington D.C., and once notified, may impact India’s largest exports to Bangladesh–cotton. In the 2024-2025 financial year, India exported $2.8 billion worth of cotton to Bangladesh, which was an 18 percent increase from the previous year.
“The United States commits to establish a mechanism that will allow for certain textile and apparel goods from Bangladesh to receive a zero reciprocal tariff rate. This mechanism will provide that a to-be-specified volume of apparel and textile imports from Bangladesh can enter the United States at this reduced tariff rate, but this volume shall be determined in relation to the quantity of exports of textiles, e.g. U.S. produced cotton and man-made fiber textile inputs, from the United States,” the Joint Statement said.
The statement added that Bangladesh will purchase approximately $3.5 billion worth of US agricultural products, including wheat, soy and corn, further adding that Dhaka will also purchase $15 billion worth of American energy in 15 years.
“Bangladesh commits to provide significant preferential market access for U.S. industrial and agricultural goods, including: chemicals; medical devices; machinery and motor vehicles and parts; information and communicational technology (ICT) equipment; energy products; soy products; dairy products; beef; poultry; and tree nuts and fruit,” it said.
The agreement struck by Dhaka will build on commitments made by Bangladesh earlier including the purchase of 3.5 million tonnes of wheat from the US, as well as its pledge to buy 25 Boeing aircraft worth anywhere from Taka (Tk) 30,000 crore to Tk 35,000 crore, according to reports.
The announcement by the interim government in Bangladesh also comes days before Dhaka heads to polls on 12 February. The deal also comes amidst the ongoing restrictions imposed by both India and Bangladesh that have curtailed trade between both countries in the last year.
In April 2025, Bangladesh imposed restrictions on imports of cotton yarn via land ports, as a measure to curtail India’s merchandise exports. Cotton remains one India’s largest export to Bangladesh.
Between April and November 2025, India exported $1.58 billion worth of cotton to Bangladesh, as well as around $1.62 billion worth of energy. Bangladesh is India’s seventh largest destination for exports, with total merchandise exports in the 2024-2025 financial year touching $11.48 billion and worth roughly $7.2 billion between April and November 2025 .
Trade between India and Bangladesh has been traditionally skewed in favour of New Delhi. India has maintained anywhere between a $6 billion to $9 billion trade surplus with Bangladesh in the last decade.
Bangladesh has maintained a robust trade surplus with the US, worth $6.1 billion in 2024, according to the Office of the US Trade Representative (USTR). Dhaka exported $8.4 billion worth of goods to the US that year, and imported roughly $2.3 billion worth of merchandise from America.
The trade agreement struck between Dhaka and Washington D.C. comes right after India and the US agreed to a deal that was set to give Indian textile exporters a competitive edge in comparison to Bangladeshi textile and apparel manufacturers.
Dhaka, which had a 20 percent reciprocal tariff rate has now seen it cut to 19 percent, while India has negotiated an 18 percent tariff rate for its merchandise exports to the US. India’s textiles and apparel sector has faced a number of challenges in its exports, especially from Bangladesh and Vietnam. Dhaka has received a number of tariff reductions globally through the generalised system of preferences, as it is a least developed country (LDC).
These tariff advantages allowed Dhaka’s textile industry to gain an advantage over India’s textile exports in Western markets. However, in the last year, India has struck a number of trade deals, with the UK, the European Union and with the US most recently with a view of reducing tariff barriers for its own textile exports.
(Edited by Tony Rai)