The US-Bangladesh Trade Deal: A Lopsided Bargain?
Bangladesh’s US tariff deal promises zero-duty access, but supply chain realities and costly concessions may outweigh limited gains.
The Gist
The recent US-Bangladesh joint statement, while touted as a milestone, may not provide the expected benefits for Bangladesh's garment industry.
- Bangladesh's garment industry is heavily reliant on imports, with only a small portion sourced from the US.
- The deal may primarily boost US cotton exports rather than significantly enhance Bangladesh's apparel market.
The joint statement issued on February 9, between the United States and Bangladesh has been framed as a milestone. On paper, it looks significant: the US will cut its reciprocal tariff on Bangladeshi goods to 19% and—more importantly—offer zero reciprocal tariffs on garments made using US-origin cotton and man-made fibres.
However, a closer look at the arithmetic and the supply chain suggests that Bangladesh may have traded the farm for a very small carrot.
The Arithmetic of Access
Let’s break down the costs. A Bangladeshi garment currently facing a 12% US MFN tariff will now attract a total duty of 31% (12% MFN + 19% reciprocal). For comparison, Indian goods face about 30%. The "prize" is the waiver of that 19% reciprocal duty—but only if the garment is made with US fibres.
While this sounds like a generous concession, the structural reality of Bangladesh’s garment industry tells a different story. In 2024, Bangladesh exported $50.9 billion in garments globally. Of that, a staggering 63% ($32.3 billion) went to the European Union, duty-free and without the stringent sourcing strings the US is now attaching.
The Supply Chain Mismatch
The US offer assumes that Bangladesh can easily swap its raw materials. The data says otherwise. To make $50.9 billion worth of clothes, Bangladesh imported $16.1 billion in textiles in 2024.
- China supplied $9 billion.
- India supplied $3.1 billion.
- The US supplied a meager $274 million.
The mismatch is even more glaring at the product level. Bangladesh imported $1.8 billion in cotton yarn; India supplied $1.6 billion of it. For woven fabrics—the lifeblood of garment making—China dominates, supplying $1.1 billion out of a $1.4 billion market.
Most of Bangladesh’s factories aren't starting from raw fibre; they are "cut-and-sew" operations using imported yarn and fabric. The US primarily exports raw cotton. To qualify for these zero tariffs, Bangladesh would need to overhaul its entire spinning and weaving infrastructure—an investment that makes little sense when its biggest customer, the EU, doesn't require it.
A High Price For A Narrow Benefit
In exchange for this conditional access, Bangladesh has opened its gates wide. It has committed to:
Market Access: Opening its doors to US machinery, chemicals, soy, dairy, and beef.
Direct Purchases: A commitment to buy $3.5 billion in U.S. farm products and long-term deals for US energy and aircraft.
Regulatory Surrender: Accepting extensive US oversight on labour standards, digital customs, and IP enforcement.
The Bottom Line
Bangladesh has granted Washington deep leverage over its export sector in exchange for a benefit most of its factories can’t even use.
Ultimately, this deal appears more effective at boosting U.S. cotton exports than transforming Bangladesh’s apparel fortunes. For an industry structurally wedded to Asian supply chains, the "zero-duty" carrot is largely out of reach. As the compliance costs mount and the export gains remain marginal, Bangladesh may soon find itself reflecting on the lopsided nature of this bargain.
