The United States is Bangladesh's largest export market and a major source of foreign direct investment, with bilateral relations focusing heavily on garment trade, energy, and development. A 2026 trade agreement is reducing U.S. tariffs on Bangladeshi goods to 19 per cent, with special provisions for apparel made with U.S. cotton.
The two countries signed a bilateral investment treaty in 1986. U.S. companies are the largest foreign investors in Bangladesh. Although Bangladesh may not be a major trading partner of the US, the US is an important and major partner to Bangladesh.
Relations between British colonial Bengal and the United States began in 1792, when Benjamin Joy was appointed as the first American envoy to the Bengal Presidency. The British East India Company initially refused to accept the envoy, but eventually a US consulate was established at Fort Williams. The US consulate in Bengal was one of the first U.S. diplomatic posts in Asia, and Chittagong was one of the seven ports under the jurisdiction of the US consulate at Fort Williams.
After the emergence of Bangladesh in December 1971 and the withdrawal of Indian troops in March 1972, the United States formally recognised the newly independent country on April 4, 1972. Now the United States is the single largest export destination for Bangladesh, accounting for about 20 per cent of its total exports, with a heavy concentration on readymade garments (RMG).
In 2024, US goods exports to Bangladesh were approximately $2.21 billion. Based on the total value of U.S. exports, this amount represents a very small fraction, generally estimated at less than 0.2 per cent of total US global exports, making it a relatively minor, albeit growing, market for US goods compared to top partners like Canada or China.
In the 2024-25 fiscal year, Bangladesh shipped goods worth $8.69 billion to the US, which represented 18 per cent of its total export earnings. The US market absorbs roughly 20 per cent of Bangladesh's total garment exports. Bangladesh holds a 10.53 per cent share of the US apparel market as of early 2026, making it a major supplier alongside China and Vietnam.
Despite recent global trade shifts and new tariff structures, Bangladesh's share of the US apparel market rose to 10.53 per cent in early 2026, up from 9.26 per cent the previous year. Despite challenges, apparel exports to the US grew by over 15 per cent in the Jan-Oct 2025 period. The U.S. goods trade deficit with Bangladesh was $6.1 billion in 2024. The U.S. services trade surplus with Bangladesh was $926 million in 2024.Despite efforts to increase U.S. exports, the trade balance continues to heavily favour Bangladesh due to high garments export.
Bangladesh's imports from the USA primarily consist of agricultural commodities, machinery, and industrial raw materials, with total goods imports reaching approximately $2.3 billion in 2024, showing a 2.0 per cent increase from the previous year. Key import items include raw cotton, wheat, soybeans, aircraft, and LNG.
As of February 2026, a new reciprocal trade agreement commits Bangladesh to lower tariffs on these U.S. goods. Bangladesh will cut tariffs to zero on products such as poultry, seafood, rice, corn and cereal grains when the agreement comes into force. The tariffs on some other US products, such as almonds, will reduce to zero over five to 10 years.
The U.S.-Bangladesh Reciprocal Trade Agreement, signed in February 2026, aims to enhance economic ties by reducing tariffs, cutting non-tariff barriers, and boosting bilateral trade. Key features include a reduction of U.S. tariffs on Bangladeshi goods to 19 per cent, a special zero-tariff mechanism for certain Bangladeshi textiles, and increased access for U.S. agricultural and manufactured products in Bangladesh. The U.S. established a mechanism to provide zero-reciprocal tariff rates for specific Bangladesh-made textile and apparel goods.
The agreement of February 2026 has secured a negotiated 19 per cent tariff rate on certain products with the US, following initial fears of a higher 20-37 per cent tariff. The agreement has been described by many as asymmetrical and bundled with security alignment. According to the Centre for Policy Dialogue (CPD)Bangladesh could lose around Tk. 1,327 crore in customs revenue in the current fiscal year due to the recent trade agreement with the US. However, this revenue loss could be offset by significant consumer welfare benefits.
Bangladesh remains one of the very high tariff countries in the world and the highest in South Asia. The agreement stipulates to phase out tariffs by 2035, with significant tariff reduction at the start of the agreement. Beyond tariff reductions, Bangladesh also has committed to dismantle a wide range of non-tariff barriers. Furthermore, Bangladesh has agreed to recognise US regulatory standards, thus limiting Bangladesh's regulatory autonomy.
But the agreement highlights the contemporary reality of the limits of trade diplomacy in the current Trumpian global economic order. The principal objective of the US trade policy under the Trump administration is to bring down trade deficits. Bangladesh had a trade surplus of about $6 billionin 2025 with the US. One way to reduce the deficit by increasing imports of agricultural commodities, energy products and commercial aircrafts among others from the US.
The US Supreme Court by a 6-3 decision ruled on February 20 that many of Trump's tariffs-those that invoked the International Emergency Economic Powers Act (IEEPA)-were unconstitutional. The statute does not authorise the use of tariffs. Moreover, as the ruling emphasised, the president does not have the authority to tax. The power to tax, including the imposition of tariffs, lies instead with the US Congress, in the unambiguous words of the US Constitution.
The Secretary of the Ministry of Commerce, Bangladesh suggested that the agreement lost its legal basis now due to the ruling and the deal is under review. But the situation is not as simple as that. The decision removes the fastest tool for imposing broad country-level duties, but it does not end the tariff debate. Other statutory authorities remain in play, and businesses and trading partners are left to assess what comes next. Also, Trump in his Social post said, "Any country that wants to 'play games' with the ridiculous supreme court decision, especially those that have ripped off the USA for years, even decades, will be met with a much higher tariff, and worse than that which they just recently agreed to."
It seems that Trump's immediate policy response was dictated by vengeance: a 10 per cent across-the-board tariff increase on all countries, which he extended to 15 per cent a day later. The new worldwide tariffs were enacted under the Trade Act of 1974, which allows the President to impose temporary tariffs up to 150 days to deal with urgent balance-of-payments shortfalls, after which Congress must decide to extend it.
Trump has plenty of other options under the US trade law. Among them are tariffs on certain sectors in the interest of national security, tariffs imposed for unfair trade practices, and tariffs to counter countries that "uniquely discriminate" against the United States. Trump is clearly determined to show that no Supreme Court decision is going to hamstring him in his determination to have absolute control over tariff policy.
With his escalating, ever-changing tariffs on imported goods, the President has roiled the global economy sufficiently to achieve his objective of replacing rules-based free trade with a transactional system that makes access to the U.S. market contingent on his caprice. When he first imposed a roster of high tariffs on what he called "Liberation Day" in April 2025, he claimed that jobs and factories would "come roaring back into our country." But by zapping allies and enemies alike with a burst of tariffs, Trump raised the average tariff on imports from 2.5 per cent in January 2025 to a hefty 16.6 per cent just six months later, the highest since 1932, while not faintly stopping the ongoing loss of jobs in the manufacturing sector. Now the US attack on Iran has added further complications to the global trading system.
The Supreme Court ruling exposes a profound crisis within the US political establishment. One faction-internationally oriented finance capital-acknowledges that Trump's tariff war has been disastrous: it drives up consumer prices, disrupts supply chains, and triggers retaliatory actions that undermine the United States' global dominance, in addition to the consequences of the attack on Iran. The other the tariff power is an instrument of personal rule, a means of rewarding allies and punishing enemies, completely outside the framework of democratic accountability. For countries like Bangladesh with a very heavy reliance on the US market for its exports, it is wise to pursue a very delicate balance in dealing the US under the Trump administration.
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