Bangladesh has secured a reduced tariff rate of 19 per cent on exports to the United States under a new bilateral trade agreement, providing major relief to the country’s key garment sector. The tariff cut comes after months of negotiations, as the US had earlier proposed tariffs of up to 37 per cent on Bangladeshi exports.

The development was announced on Monday by Bangladesh interim chief adviser Muhammad Yunus, who said the United States has also agreed to offer duty-free access to certain textile and apparel products, provided they are made using materials produced in the US.

“Washington has committed to creating a pathway for selected Bangladeshi garments made with US materials to receive zero-tariff access,” Yunus wrote on X.

The agreement is the result of a series of discussions between Dhaka and Washington that continued for nine months. In April, the United States had initially proposed a tariff as high as 37 per cent on Bangladeshi exports. Following further talks, Bangladesh secured a reduction in August last year, which brought the tariff rate down to 20 per cent. Under the newly signed agreement, the tariff has now been reduced further to 19 per cent.

Yunus described the deal as an important achievement for Bangladesh, stating that it would help protect employment and strengthen the country’s role in the global textile supply chain. He called the agreement a major step towards ensuring job security for workers dependent on the garment industry.

According to an official statement issued by Dhaka, the agreement was signed on behalf of Bangladesh by Commerce Adviser Sheikh Bashir Uddin and National Security Adviser Khalilur Rahman. On the US side, the agreement was signed by Ambassador Jamieson Greer, the United States Trade Representative.

Greer praised Yunus and the Bangladeshi negotiating team for successfully concluding the deal. “This agreement will strengthen Bangladesh’s position in US trade policy,” he said, as quoted in the statement.

The White House also confirmed that both countries had agreed to work on addressing non-tariff barriers in Bangladesh. The statement indicated that the agreement includes commitments from both sides to deal with these barriers as part of strengthening trade relations.

The tariff reduction is being seen as crucial for Bangladesh’s garment industry, which remains the backbone of the country’s economy. The readymade garments sector contributes more than 80 per cent of Bangladesh’s total export earnings and employs around four million workers. Most of these workers are women from rural and low-income backgrounds. The sector also contributes about 10 per cent to the country’s gross domestic product.

Industry leaders believe that the reduced tariff rate will help Bangladeshi garment manufacturers remain competitive in the US market, which continues to be one of Bangladesh’s biggest export destinations.

In recent years, many garment factories in Bangladesh have been under pressure due to rising production costs, higher energy prices, currency volatility, and tougher compliance requirements set by international buyers. These challenges have affected the industry’s ability to compete strongly in global markets.

The tariff relief is expected to provide support to manufacturers who have struggled to maintain stable business conditions. With the US market being vital for Bangladesh’s exports, the lowered tariff rate could offer some breathing space for the industry.

Earlier this month, US President Donald Trump announced a trade deal with India under which tariffs were reduced to 18 per cent from 50 per cent. The new Bangladesh-US agreement comes shortly after that announcement.

The agreement has also been signed at a politically sensitive time for Bangladesh. The country is set to hold elections on Thursday after being under an interim administration since August 2024. The interim government took charge after former prime minister Sheikh Hasina fled to India, where she remains.

In the days leading up to the elections, tensions have increased. Fresh violence was reported ahead of the polls, with more than 40 people injured in clashes between local party workers late on Wednesday night. The injured included women.

The interim government has been trying to project economic stability and credibility ahead of the elections, and trade policy has become a central focus of this effort. The signing of the trade agreement with the United States is being viewed as a significant step in that direction.

The reduced tariff rate and the possibility of duty-free access for selected garments made with US materials could have an important impact on Bangladesh’s export sector, especially at a time when the garment industry is facing multiple challenges. The agreement also highlights the importance of continued negotiations between Dhaka and Washington in shaping Bangladesh’s access to one of its largest export markets.