On February 9, 2026, the United States and Bangladesh formalized a groundbreaking Agreement on Reciprocal Trade, signaling a major shift in the economic landscape of South Asia. The deal, signed in Dhaka by U.S. Trade Representative Jamieson Greer and Bangladesh’s Commerce Adviser Sheikh Bashir Uddin, provides critical relief to the world’s second-largest garment manufacturer. Under the new terms, the Trump administration has agreed to trim the reciprocal tariff on Bangladeshi goods from 20% to 19%. This marks a significant de-escalation from the initial 37% tariff proposed last year, which was designed to address trade imbalances. The move is seen as a lifeline for Bangladesh’s textile industry—a sector that accounts for over 80% of the country’s export earnings and employs nearly 4 million people—as it works to rebuild following the political upheaval and student-led revolution of 2024.
A standout feature of this agreement is the “Zero Reciprocal Tariff” mechanism for specific textile and apparel products. While the baseline tariff is 19%, certain garments manufactured in Bangladesh using U.S.-produced raw materials, such as American cotton and man-made fibers, will be allowed to enter the American market at 0% duty. This strategic “circular” trade model encourages Bangladesh to pivot its supply chain toward American farmers and away from regional competitors. In exchange, Bangladesh has committed to purchasing approximately $3.5 billion in U.S. agricultural products and an estimated $15 billion in U.S. energy (LNG) over the next 15 years. This massive procurement plan, which also includes the purchase of 14 Boeing aircraft for Biman Bangladesh Airlines, is a cornerstone of the deal’s reciprocal nature.
Beyond tariffs, the pact addresses deep-seated non-tariff barriers and regulatory hurdles. Bangladesh has agreed to recognize U.S. Federal motor vehicle safety standards and FDA certifications for pharmaceuticals and medical devices, effectively opening its market of 175 million people to American manufacturers. The deal also includes robust commitments to uphold international labor rights and strengthen environmental protections, areas that have historically been under intense scrutiny in the Bangladeshi garment sector. By aligning with Washington’s standards, the interim government led by Chief Adviser Muhammad Yunus has not only secured market stability but also positioned Bangladesh as a preferred trading partner in the Indo-Pacific.
This agreement carries significant regional implications, particularly for India, which recently secured an 18% tariff rate. While India’s baseline rate is lower, the zero-tariff provision for Bangladesh-made apparel using U.S. cotton could make Dhaka’s exports more price-competitive in American retail stores. As Bangladesh prepares for its upcoming national elections, this trade deal serves as a massive economic victory for the interim administration, ensuring that the country’s economic engine—the “Ready-Made Garment” sector—remains viable and competitive on the global stage.