Bangladesh has agreed to eliminate customs duties, supplementary duties, and regulatory duties on approximately 4,500 products from the United States as part of the newly signed reciprocal trade agreement, marking one of the most significant tariff reduction measures in recent years.
Besides, tariffs on another 2,210 products will be phased out over varying timelines.
In return, the US has waived retaliatory tariffs on 1,638 Bangladeshi products, including cane and natural fibre, iron and steel, minerals, pharmaceuticals, chemicals, plastics, wood, and apparel made from US cotton. However, the regular most-favoured-nation (MFN) tariffs averaging 16 to 17 percent will still apply on these goods.
Most crucially, the US has reduced the reciprocal tariff rate on Bangladeshi exports by one percent to 19 percent under the deal signed on Monday and later published by the Office of the United States Trade Representative (USTR). The document contains detailed schedules of concessions based on HS (Harmonized System) codes.
The tariff waiver on 4,500 goods is effective from the date the deal was signed.
Out of the other 2,210 products where tariffs will be phased out, duties on 1,538 goods have already been reduced by 50 percent from the day the deal was signed. The other 50 percent of the duties will be withdrawn in equal instalments over four years and fully eliminated from January 1 of the fifth year.
In case of the other 672 products, half of the existing tariff will be scrapped initially, while the remainder will be phased out gradually over nine years and brought down to zero in the tenth year.
Apart from a total of 6,710 products (4,500 and 2,210), Bangladesh already does not impose any tariff on 422 products imported from the US, and that will remain unchanged.
Meanwhile, Bangladesh will continue to apply tariffs on an additional 326 products as per the current tariff schedule.
Despite the sweeping duty cuts, the agreement does not provide exemptions from value-added tax (VAT), advance income tax, or advance tax at the import stage.
Importers will continue to pay these taxes, meaning that while customs-related duties will be withdrawn, revenue collection from other import-stage taxes will remain in place.
According to National Board of Revenue (NBR) data, Bangladesh imported goods worth about $2.5 billion from the United States in the fiscal year (FY) 2024-25. From these imports, the government collected Tk 762 crore in customs-related duties and Tk 1,220 crore in VAT and advance taxes. Customs, supplementary, and regulatory duties account for roughly 38 percent of total revenue collected from US-origin goods.
The US products covered under the recently signed agreement span a broad range of sectors.
In agriculture and food, the list includes wheat, corn, soybeans and soybean oil, raw cotton, dairy products, processed foods, animal feed, fruits, and nuts.
In energy and minerals, it covers liquefied natural gas (LNG), mineral fuels, coal, and petrochemical products.
Other key sectors include textiles and industrial raw materials such as yarn and specialised fabrics; chemicals and pharmaceuticals, including industrial chemicals, plastics, fertilisers, and medicines; machinery and industrial equipment such as electrical machinery, agricultural equipment, generators, turbines, and aircraft parts; and iron, steel, and other metal products.
Technology and high-value goods, including electronic components, telecommunications equipment, and scientific instruments, are also covered, alongside consumer goods such as wood and paper products, furniture and household items.
In return, the US has waived retaliatory tariffs on 1,638 Bangladeshi products. These include cane and natural fibre products, iron and steel goods, graphite and mineral items, pharmaceuticals, chemicals, plastics and wood-based products. Apparel made from US-origin cotton will also qualify for zero retaliatory duty, although MFN tariffs --averaging 16 to 17 percent --will remain applicable.
The agreement comes against the backdrop of evolving trade tensions. On April 2, 2025, US President Donald Trump announced retaliatory tariffs on exports from 100 countries. Bangladesh initially faced a 37 percent rate, later reduced to 35 percent in July and to 20 percent in August following negotiations.
As part of this deal, the US has cut its reciprocal tariff on Bangladeshi exports from 20 percent. Including previous duties, the overall tariff burden on Bangladeshi exports to the US currently stands at about 34 percent.
Md Hafizur Rahman, former director general of the WTO Cell at the Ministry of Commerce, said the proposed measure could offer notable tariff advantages for Bangladesh’s garment sector.
“If garments are produced using US raw materials, the existing 19 percent reciprocal duty could be reduced to zero. That would be a major benefit for us,” he said, adding that it could strengthen Bangladesh’s position against competitors.
“Our key competitors, India and Pakistan, have their own cotton. If they import and instead rely on local cotton, domestic prices there may fall, and their farmers could suffer. From that perspective, this is a very positive sign for Bangladesh. It may lead to an increase in our RMG exports,” he said.
However, he cautioned that the benefits would come with significant obligations.
“Bangladesh will have to sign 13 new intellectual property rights agreements and conventions for implementation. Enforcement will have to be much stricter, which may limit the flexibilities we enjoyed during the LDC transition period,” he said.
Rahman warned that failure to comply could lead to losses and noted concerns over pricing rules.
“If a foreign investor sets up operations in Bangladesh and exports at prices lower than the market rate, and that leads to export losses of US to Bangladesh or any other country, then action may be required. However, it is not entirely clear which ‘market price’ would be used as a benchmark,” he noted.
“In such cases, the United States would inform Bangladesh, and the government would need to take measures. This may create uncertainty for export-oriented investors, as companies will have to consider whether they can price their products below prevailing market rates without triggering complications,” he said.
Rahman noted that while US companies generally operate in high-value segments, price competition could still become an issue.
“There are also several additional compliance requirements that Bangladesh will have to fulfil,” he added.
