Government negotiations on tariffs should persist, says BGMEA, as the U.S. contemplates deeper tariff reductions for other countries.
In a significant development, Bangladesh and the United States are poised to sign a trade agreement this August 2025, marking a shift in their trade relations. Although the formal agreement has yet to be inked, negotiations have progressed, with Bangladesh agreeing to several US conditions [1][3].
The new agreement will impose an additional 20% reciprocal tariff on Bangladeshi garment exports to the US. This change, while challenging for the Bangladesh garment industry, particularly small and medium-sized enterprises (SMEs), presents an opportunity for partial duty exemptions through greater use of US raw materials [2].
At a press conference today (1 August) at the BGMEA office in Dhaka, BGMEA President Mahmud Hasan Khan urged the government to continue negotiations with the United States and requested continued policy support [3]. He expressed concern about the impact of the 20% duty on production costs and called for the government to support especially small and medium factories to prevent them from falling out of the market [3].
Previously, Bangladesh paid 16.5% in Most Favoured Nation (MFN) tariffs. With the new 20% additional duty, the total rate now stands at 36.5%, though it will vary by product [2]. However, if at least 20% of the raw materials, such as American cotton, come from the United States, then the additional 20% duty will not be applicable on the value of those US-sourced materials [2].
Key US demands as part of the deal include Bangladesh reducing Chinese imports, providing unrestricted access to US products under US quality and safety standards, and increasing imports from the US in sectors such as military equipment, civilian aircraft (including an order for 25 Boeing jets), crude oil, edible oil, wheat, liquefied natural gas (LNG), cotton, and soybean oil [1][2][5]. The US also requires Bangladesh to ensure full labor rights in Export Processing Zones and to drop legal cases against garment workers and union leaders from earlier protests [1].
Bangladesh’s submission of a detailed position paper to the US Trade Representative on July 23, 2025, marked a turning point in the negotiations, leading to a more favorable stance by the US [4]. The objective behind Bangladesh increasing imports from the US—such as the Boeing jet purchase—is partly to balance trade and reduce the US tariff on Bangladeshi exports, which was previously as high as 35% [2].
In a positive note, Bangladesh is now on a more equal footing with key competitors such as China and India, as the new tariff is lower than theirs (China's 30% and India's 25%) [1]. Mahmud Hasan Khan thanked the US government for announcing a balanced tariff structure [3].
As negotiations continue, Bangladesh must stay engaged to potentially enjoy further tariff reductions once the finalised deals are announced [6]. The BGMEA President also requested improved efficiency at Chattogram Port, uninterrupted power and gas supply, and a more industry-friendly customs system [3].
Sources:
[1] The Daily Star (2025). US-Bangladesh trade deal near: Tariff on garment exports to be 20%. Retrieved from https://www.thedailystar.net/business/news/us-bangladesh-trade-deal-near-tariff-on-garment-exports-to-be-20-1890831
[2] The Financial Express (2025). US-Bangladesh trade deal: A new chapter in trade relations. Retrieved from https://www.financialexpress.com.bd/fe-report/us-bangladesh-trade-deal-a-new-chapter-in-trade-relations-20250801
[3] The Bangladesh Today (2025). BGMEA President urges govt to continue negotiations with US. Retrieved from https://www.thebangladeshtoday.com/news/2025/08/01/bgmea-president-urges-govt-to-continue-negotiations-with-us
[4] The Dhaka Tribune (2025). Bangladesh submits detailed position paper to US Trade Representative. Retrieved from https://www.dhakatribune.com/business/2025/07/24/bangladesh-submits-detailed-position-paper-to-us-trade-representative
[5] The Financial Express (2025). US demands: Bangladesh to ensure full labor rights, drop cases against workers. Retrieved from https://www.financialexpress.com.bd/fe-report/us-demands-bangladesh-to-ensure-full-labor-rights-drop-cases-against-workers-20250724
[6] The Daily Star (2025). Bangladesh must stay engaged in negotiations: BGMEA President. Retrieved from https://www.thedailystar.net/business/news/bangladesh-must-stay-engaged-in-negotiations-bgmea-president-20250801
- The trade agreement between Bangladesh and the United States, set to be signed in August 2025, will impact the finance sector, as it introduces a 20% reciprocal tariff on Bangladeshi garment exports to the US, which may lead to increased production costs.
- In the realm of politics and general news, the new trade agreement also includes terms for Bangladesh to increase imports from the US in various sectors, such as military equipment, cotton, and soybean oil, aiming to balance the trade relationship and potentially secure role concessions in the US finance market.
