The US administration has decided to allow duty-free entry for garments produced in Bangladesh using cotton and synthetic fibers imported from the United States.
At the same time, the reciprocal tariff imposed on Bangladesh has been reduced from 20% to 19%.
Industry insiders say the decision, once implemented under a bilateral trade arrangement, could reshape Bangladesh’s export strategy.
Previously, cotton was sourced largely from third countries before garments were exported to Western markets. Under the new framework, cotton imported directly from the US and used in production will qualify for zero-duty access to the American market.
Strategic supply chain shift
Experts view the move as more than a tariff adjustment, describing it as a step toward a more structured supply chain partnership between Bangladesh and the US textile sectors.
American cotton growers gain a larger export outlet, while Bangladesh benefits from lower effective duties and improved competitiveness.
National Security Adviser Khalilur Rahman, who led negotiations for Bangladesh, said zero-duty access for specific textile and apparel products would provide fresh momentum to the RMG sector.
According to the Bangladesh Textile Mills Association (BTMA), cotton imports from the US rose to $0.346 billion in FY25, up from $0.278 billion the previous fiscal.
Around 10% of Bangladesh’s total cotton imports already originate from the US, a share expected to increase under the new arrangement.
Direct sourcing is also expected to streamline procurement and reduce certain logistics costs.
Commerce Ministry officials believe importing cotton straight from the US could strengthen buyer confidence over raw material quality, potentially supporting higher-value orders.
Textiles and garments account for about 84% of Bangladesh’s total export earnings, with knitwear contributing roughly 55%.
One of the key inputs for knitwear production is 10 to 30 count yarn.
BTMA data show domestic yarn production costs average $3 per kilogram, compared with approximately $2.85–$2.90 per kilogram in India.
Where Bangladesh stands in tariff competition
Following the revision, Bangladesh’s reciprocal tariff rate stands at 19% in the US market. Vietnam faces 20%, Pakistan, Cambodia and Indonesia 19%, and India 18%.
Former WTO Cell Director General Md Hafizur Rahman says Bangladesh’s relatively low labor and production costs help offset the 19% tariff, while the duty-free facility tied to US cotton could further narrow competitive gaps.
According to the Export Promotion Bureau (EPB), the US remains Bangladesh’s largest export destination. Exports to the US reached $8.69 billion in the last fiscal year, the majority from garments.
EPB data show that between February 2025 and January 2026, Bangladesh exported $7.544 billion worth of RMG products to the US, accounting for 19.46% of total RMG exports of $38.775 billion during that period.
US import data from Otexa indicate total apparel imports of $78.207 billion between December 2024 and November 2025.
Vietnam led with $16.544 billion, followed by China at $11.345 billion (14.51% share). Bangladesh ranked third with $8.183 billion, representing 10.46% of total US apparel imports. India ($4.955 billion), Cambodia ($4.713 billion), Indonesia ($4.634 billion), Mexico ($2.597 billion), Pakistan ($2.399 billion), and Honduras ($2.038 billion) followed.
Analysts note that Bangladesh’s position reflects both its concentration in the US market and its competitiveness in a demanding environment. However, evolving tariff policies, labor standards and geopolitical shifts remain factors to watch.
Exporters consider the 1 percentage point tariff reduction and the zero-duty facility for garments made with US-imported inputs a positive development.
Former BGMEA director Mohiuddin Rubel said the arrangement offers clear benefits, as Bangladesh has long sourced significant volumes of American cotton. Under the new framework, garments made from that cotton will no longer face reciprocal duties, easing pressure on exporters.
Industry leaders expect US cotton imports to rise further, with a corresponding impact on garment exports, particularly in woven and knit segments.
If fully implemented, the policy could provide fresh momentum to Bangladesh’s apparel shipments to the US in the coming years, marking a strategic adjustment in export planning rather than merely a tariff concession.
