As Bangladesh ramps up imports of key commodities from the United States, including cotton, wheat, soybeans, and energy, there is optimism about achieving additional tariff concessions. The country anticipates that the current 20% reciprocal tariff could be lowered further, which might significantly influence its trade balance and competitiveness in the US market, its largest export destination.
Commerce Advisor Sk Bashir Uddin announced on September 14 that the US has assured a potential reduction in the existing tariff, contingent upon Bangladesh’s progress in narrowing its trade deficit. Following a meeting with a US Trade Representative (USTR) delegation in Dhaka, Uddin stated that while no formal tariff rates were discussed, the US expressed satisfaction with recent trade deficit improvements and indicated that duties could be decreased once the deficit decreases further.
“Washington has conveyed that duties could be lowered if Bangladesh continues to reduce its trade imbalance,” Uddin explained, suggesting that a formal trade agreement might be finalized within the month. Officials from the commerce ministry noted that competitors like Vietnam are negotiating lower tariffs on ready-made garments, and India has resumed trade talks with the US, underscoring the strategic importance for Bangladesh to secure favorable trade terms.
A senior official, speaking on condition of anonymity, indicated that the US might reduce Bangladesh’s tariff to approximately 18%, pending final discussions with US trade authorities and advisory teams.
The US delegation, led by Assistant USTR for South and Central Asia Brendan Lynch and accompanied by Bangladesh officials including National Security Adviser Khalilur Rahman and Commerce Secretary Mahbubur Rahman, is scheduled to meet with BGMEA representatives today. BGMEA President Mahmud Hasan Khan revealed that, due to increased cotton imports from the US, there is a proposal to cut the tariff from 20% to 15% or lower. He added that further duty reductions would be supported by increased imports of cotton and ensuring compliance with US labor and welfare standards.
The discussions also covered Bangladesh’s progress in importing US products and a joint declaration on trade matters. Uddin highlighted that Bangladesh’s trade deficit with the US has been decreasing, with the current shortfall at around $6 billion. He noted that the country’s efforts to import US cotton, used extensively in the garment industry, are helping to further reduce this deficit and could lead to lower duties.
Commerce Secretary Mahbubur Rahman pointed out that Bangladesh’s cotton imports last year were valued at $600 million, with $276 million imported in just the first two months of the current fiscal year. He also mentioned that the US is offering wheat at $302 per million metric tonnes, slightly pricier than Russian wheat at $276 million, but justified by higher protein content and quality. Additionally, the private sector has imported over $450 million worth of US soybeans this year, up from $348.9 million in 2024, due to better quality and oil yield.
Long-term plans for importing Boeing aircraft remain undecided, as delivery timelines extend to 2032. However, such imports could help further reduce the US trade deficit in the future.
Bangladesh currently imports over 98% of its cotton demand, with domestic production covering merely 2%. The increased US imports of cotton are seen as a strategic move to bolster the country’s apparel exports. The government has also approved importing liquefied natural gas (LNG) worth Tk600 crore and 150,000 tonnes of wheat, alongside a contract to purchase two bulk carriers from the US for approximately $77 million.
Industry stakeholders are optimistic about potential tariff reductions. Mohammad Hatem, President of BKMEA, noted that earlier indications from Uddin suggested efforts to reduce the US duty to 15%, which would further stimulate cotton imports and apparel exports. Discussions with the US on achieving a 15% reciprocal tariff are ongoing, with recent negotiations culminating in a three-day visit by the USTR delegation.
Dhaka seeks to formalize a trade agreement and aims to reduce retaliatory tariffs from 20% to at least 15% before finalizing any deal. The US initially imposed tariffs of up to 37% and later 35%, but these have been gradually reduced through negotiations, reaching the current 20% rate in late July. Both sides aim to finalize a comprehensive agreement, contingent upon mutual agreement on the draft terms.
As diplomatic and trade talks continue, Bangladesh remains hopeful that further tariff concessions from the US will bolster its exports and economic growth.
