The US has agreed to exempt select Bangladeshi garments and textiles from import tariffs, offering Dhaka modest relief in a sector that underpins its export economy, while securing wider access for American goods to the South Asian market.
Under a new bilateral trade arrangement announced on Monday, Washington will allow certain clothing and textile products from Bangladesh to enter the US duty-free, provided they are made using US-produced raw materials. The deal also includes a marginal reduction in overall US tariffs on Bangladeshi imports, from 20 percent to 19 percent.
Bangladesh is the world’s second-largest exporter of apparel after China, with the clothing industry accounting for more than 80 percent of its export earnings and employing close to 40 lakh workers. Any tariff concession, even a limited one, is therefore significant for the country’s economy.
The move could have competitive implications for India’s apparel exporters, particularly in the mass and mid-priced segments where Bangladesh has traditionally enjoyed a cost advantage. While the exemptions are limited to garments made using US raw materials, any increase in Bangladeshi duty-free access to the US market could intensify price competition for Indian suppliers, especially in categories such as basic cotton wear and knit garments.
However, Indian exporters may retain an edge in value-added products, faster turnaround times and diversified sourcing, factors that could cushion the impact unless the scope of exemptions is expanded significantly.
According to a joint statement issued by the White House, the tariff exemptions will apply to specific apparel and textile items manufactured using American cotton and man-made fibres. The volume of such duty-free imports will be linked to the quantity of textiles exported by the US to Bangladesh, effectively tying market access to US input usage.
The White House said the agreement would strengthen bilateral economic ties and provide both countries with “unprecedented access” to each other’s markets.
In return for the tariff relief, Bangladesh has agreed to open its domestic market further to a range of US agricultural and industrial products. Washington described the access granted to American exporters as “significant preferential market access”.
The agreement follows prolonged negotiations between Dhaka and Washington after Trump imposed broad-based tariffs on several global trading partners in April last year. Bangladesh, heavily dependent on apparel exports to the US, had been seeking relief amid rising cost pressures and intensifying competition from other low-cost producers.
While the tariff cut and exemptions fall short of a comprehensive rollback, trade analysts say the deal signals a pragmatic compromise—allowing the US to promote its textile exports while offering Bangladesh limited breathing space in its most critical export sector.
