Bangladesh has committed to purchasing an estimated $15 billion in energy products from the United States over the next 15 years under the proposed Agreement on Reciprocal Trade, signed on Monday night.
According to a joint statement published by the White House on the ART, under the deal, Bangladesh agreed to provide significant preferential market access for US industrial and agricultural goods, covering products such as energy items, chemicals, machinery, motor vehicles and parts, medical devices, ICT equipment, soy, dairy, beef, poultry and fruits and nuts.
Meanwhile, on Tuesday, commerce adviser Sk Bashir Uddin told reporters that Bangladesh would see the ART as an opportunity to secure duty-free access.
Adviser Sk Bashir Uddin and United States Trade Representative ambassador Jamison Greer signed the ART virtually on behalf of their respective governments on Monday at 10:00pm Bangladesh time, reducing the reciprocal tariff on Bangladeshi products exported to the US to 19 per cent.
The joint statement also stated that RMG items manufactured using cotton sourced from the US would be eligible for zero reciprocal duty under a specific mechanism and volume threshold.
The commerce adviser said that about 86 per cent of exports to the US are RMG items, which could enjoy duty-free access, while the remaining 14 to 15 per cent would be subject to a 19 per cent reciprocal duty, in addition to a regular 15-16 per cent tariff.
Under the ART, the US committed to establishing a mechanism to allow certain textile and apparel goods from Bangladesh to receive a zero reciprocal tariff rate.
This mechanism will allow a specified volume of apparel and textile imports from Bangladesh to enter the US at the reduced tariff rate.
‘However, this volume should be determined in relation to the quantity of exports of textiles, e.g., US-produced cotton and man-made fibre textile inputs, from the US,’ the joint statement said.
Bangladesh was the largest importer of cotton in 2025, importing 7.82 million bales of cotton from its global sources. The US supplied 0.77 million bales to Bangladesh during the period.
The clause of zero duty for US cotton-made items will potentially boost Bangladesh’s competitiveness in its largest export destination, which the businesses have sought for a long time.
Beyond tariffs, both sides agreed to tackle non-tariff barriers affecting trade and investment.
Bangladesh would accept vehicles built to US federal motor vehicle safety and emissions standards, recognise US Food and Drug Administration certificates and prior marketing authorisations for medical devices and pharmaceuticals and remove import restrictions or licensing requirements on US remanufactured goods, the statement said.
Bangladesh also committed to permit free transfer of data across trusted borders, to support adoption of a permanent moratorium on customs duties on electronic transmissions at the World Trade Organisation, to follow science and risk-based processes to allow the import of safe US food and agricultural goods and to remove barriers on the insurance market, digitalise its customs procedures and to adopt and implement good regulatory practices.
On labour and sustainability, Bangladesh pledged to protect internationally recognised labour rights, including ‘adopting and implementing a prohibition on the importation of goods produced by forced or compulsory labour,’ strengthening freedom of association and collective bargaining rights and improving enforcement of labour laws.
It is also committed to ‘adopt and maintain high levels of environmental protection and effectively enforce its environmental laws.’
Moreover, the two countries noted additional commercial deals, including aircraft procurement and about $3.5 billion in US agricultural products, such as wheat, soy, cotton and corn.
The US said it would work through institutions such as the Export-Import Bank of the United States and the US International Development Finance Corporation to consider supporting investment financing for critical sectors in Bangladesh, in collaboration with US private-sector partners.
Both governments said they would ‘promptly finalise the Agreement on Reciprocal Trade’ and complete domestic formalities before it entered into force.
Regarding finalisation, Bashir Uddin said on Tuesday that the agreement clearly included provisions on enforcement and an exit clause.
The agreement will come into force on the date of notification. It would be effective for the US when it issues the notification and Bangladesh would issue the notification around the same time, as the cabinet has already approved it, he added.
‘Although these provisions were not included in the initial draft, they were added following negotiations from our side,’ he added.
Either party will be able to exit by serving a two-month prior notice, he added, saying that Bangladesh had maintained from the outset that it would not enter into any agreement that did not allow for an exit option.
‘We were also mindful that a future government might consider the agreement unsuitable for any reason. That is why we incorporated the exit clause in the deal, which is one of our key achievements,’ he said.
Commerce secretary Mahbubur Rahman said that the agreement had also a clause titled ‘Potential Tariff Adjustment for Partner Countries’, which would take effect from the day the agreement comes into force.
‘Under this facility, the US would extend duty-free benefits for around 2,500 items, including all HS codes of pharmaceutical products, plastic goods, aircraft parts and plywood boards,’ he added.
The commerce adviser said that the agreement would create significant export opportunities in the US, the world’s largest economy, with a market size of about $36 trillion.
‘At the same time, increasing imports of agricultural products from the US would help reduce Bangladesh’s trade deficit. We usually import agricultural products, like wheat, corn, oilseeds and others — totalling nearly $15 billion,’ he added.
Responding to a question, he said that the agreement did not include any third-country-specific clauses.
He said that although there were initial indications of such provisions during the negotiations, Bangladesh did not agree to them.
‘We made it clear that we could not accept any clause that creates sensitivity towards any particular country or forces reductions in imports from specific sources,’ he added.
He added that Bangladesh’s business model was based on imports, value addition and exports, and the country successfully concluded the negotiations by maintaining that position.
The United States announced steep tariff hikes on imports from more than 100 countries on April 2, 2025. Bangladesh was initially subjected to an additional 37 per cent duty, which was reduced to 35 per cent.
After a series of negotiations, the additional duty was reduced to 20 per cent on July 31, 2025 with the change taking effect on August 1.
The interim government has been negotiating for more than nine months to reduce the additional tariff, culminating in the signing of the agreement between the two countries on Monday.
Kutubuddin Ahmed, founder and chairman of Envoy Textiles Limited, said that it was encouraging that the US had reduced Bangladesh’s reciprocal tariff by 1 percentage point and offered zero-duty market access for the RMG.
A trade agreement between Bangladesh and the US would help boost apparel exports, as the US government has offered duty-free access for Bangladeshi garments made using US cotton.
‘Although US cotton is slightly more expensive than other sources, by around three to four cents per pound, the reduction of the duty rate from 34 per cent to zero would provide a significant competitive advantage,’ he added.
Following this move, several Bangladeshi spinning mills are expected to expand production capacity, while apparel exporters would become more competitive in the US market, he said.
He expressed optimism that Bangladesh’s apparel exports to the US could reach $15 billion within the next two to three years.
Furque Hassan, managing director of Giant Group, served as the president of the Bangladesh Garment Manufacturers and Exporters Association for the 2021-24 tenure.
He worked to persuade the US to grant zero duty on RMG products manufactured using US cotton and raw materials, through a series of negotiations and numerous letters.
He said that Bangladesh’s key achievement was securing zero-duty market access for apparel made with US cotton, following a long process that began with the withdrawal of the double-fumigation requirement for US cotton.
He also said that two US congressmen from cotton-producing states played a role in raising the issue in the US Congress, which helped advance the process.
US buyers and retailers now have a responsibility to promote US cotton by offering better prices for garments made with US cotton, he added, saying that it was a premium product with higher costs due to its quality, which would help support American cotton farmers.
The trade deal is likely to benefit the US more than Bangladesh, as Bangladesh currently imposes an average tariff of 6-7 per cent on imports from the US, while the US levies an average tariff of about 17 per cent on Bangladeshi products.
Ali Arsalan, country representative of Cotton USA, told New Age that as the ART included a clause of tariff reduction on US cotton-made RMG items, it would accelerate cotton import from the US.
‘There are some conditions regarding specified volume, time-frame and certain products. When the mechanism would be disclosed, we could evaluate it properly,’ he added.
He also said that the US proposed the Buying American Cotton Act, 2026, designed to boost US cotton demand by providing tax credits for products made with American-grown cotton.
‘It incentivises brands to use domestic cotton, yarn or fabric, aiming to support local farmers. Once it’s passed, the brands would convince supply chains to use American-grown cotton,’ he added.
Mohiuddin Rubel, former BGMEA director, said that although 1 per cent might seem low, it had a significant impact.
‘The rate is close to most of our competitors, but in addition, we obtained the zero duty on US-made cotton,’ he added, saying that if the mechanism could be implemented properly, Bangladesh would outpace competitors through this clause.
Moreover, the buyers have always trusted Bangladesh, focusing on high-value products, innovation could further accelerate Bangladesh’s exports, he added.
The US is Bangladesh’s largest export destination.
In 2024, Bangladesh exported to the US goods worth about $8.4 billion, of which $7.34 billion accounted for readymade garments. In the year, the country imported US goods worth $2.2 billion.
