US to Exempt Some Bangladeshi Clothes from Tariffs
19 hours ago
Osmond Chia, Business Reporter
Bangladesh has made significant strides in securing exemptions for certain clothing and textile items made with US-produced materials. This new agreement, announced on Monday, is set to reshape trade dynamics between the two nations.
Key Elements of the Agreement
– Tariff Reductions: The US will reduce its tariff rate on Bangladeshi exports from 20% to 19%. In exchange, Bangladesh will open its markets to a wider array of American products.
– Unprecedented Access: The agreement aims to strengthen economic ties, providing unprecedented access for both markets. The US will identify specific clothing and textile goods from Bangladesh, allowing them to enter duty-free. This includes items produced using American cotton and man-made textiles.
– Impact on Bangladesh’s Economy:
– The apparel industry forms the backbone of Bangladesh’s economy, making it the world’s second-largest exporter of clothing after China.
– The clothing sector contributes over 80% of Bangladesh’s total export revenue and employs approximately four million workers.
– Market Expansion: In return, Bangladesh has agreed to offer significant preferential market access to various American agricultural and industrial products, such as:
– Chemicals
– Medical devices
– Car parts
– Soy products
– Meat
Additional Commitments
– Regulatory Recognition: Bangladesh will adopt American standards for food, drug, vehicle safety, and emissions, simplifying the entry process for US goods.
– Labor and Environmental Protections: The country has committed to uphold internationally recognized labor rights and enhance its environmental protection measures while adhering to agreements to purchase significant amounts of US agricultural, aircraft, and energy products.
Political Context
As Bangladesh prepares for its general elections on Thursday, the implications of this agreement are substantial. The nation, currently governed by an interim administration since 2024, when former Prime Minister Sheikh Hasina was ousted, is seeking stability and growth amidst a challenging economic landscape.
Competitive Landscape
The new tariff cuts position Bangladesh competitively with India, which faces an 18% levy on exports. Previously, when tariffs were first implemented in April 2025, India was initially subjected to 25%, while Bangladesh faced a much steeper 37% tariff.
In conclusion, the US’s commitment to exempt some Bangladeshi clothes from tariffs marks a pivotal moment for the country’s apparel industry. This agreement not only enhances bilateral trade but also sets the stage for Bangladesh to navigate its economic challenges successfully.