Bangladesh Accelerates US Trade Talks After India Secures Tariff Advantage

Bangladesh is moving swiftly to conclude a trade agreement with the United States amid growing concerns that it could lose export competitiveness following India’s recent tariff concessions from Washington. The proposed deal, expected to be signed on February 9, has triggered debate within Bangladesh due to the lack of public disclosure and its timing just days before the country’s national elections.

Government officials and trade analysts say Dhaka’s urgency intensified after India and the United States announced a new trade arrangement that reduced tariffs on Indian goods to 18 per cent. For Bangladesh, whose economy is heavily dependent on exports to the US—particularly ready-made garments—this development has raised fears of losing market share to a regional competitor offering similar products at lower duty rates.

Heavy Dependence on the US Market

The United States is Bangladesh’s largest single export destination. Apparel and textile products dominate this trade, accounting for nearly all of Bangladesh’s exports to the American market. Industry estimates suggest that garments worth between $7 billion and $8.5 billion are shipped annually to the US, making tariff levels a critical factor in sustaining demand from American buyers.

In April 2025, Washington imposed tariffs of around 37 per cent on Bangladeshi goods. Following negotiations, the rate was reduced in stages, reaching about 20 per cent by August. Officials familiar with the current talks indicate that the new agreement could lower tariffs further, possibly to around 15 per cent. Such a reduction is seen as essential for Bangladesh to remain competitive with India and other exporting nations.

Confidential Negotiations Raise Questions

A major point of contention surrounding the agreement is the secrecy under which it has been negotiated. In mid-2025, Bangladesh’s interim administration entered into a formal confidentiality arrangement with the United States, committing to keep details of the tariff and trade discussions restricted. As a result, no draft of the agreement has been shared publicly, nor placed before Parliament or consulted with key industry bodies.

The timing of the expected signing—approximately 72 hours before national elections scheduled for February 12—has further fuelled criticism. Economists and political observers argue that finalising a long-term trade framework during an election period limits democratic scrutiny and leaves the incoming elected government with little room to reassess the terms.

Trade experts note that while interim governments are empowered to handle routine administration, agreements with significant economic implications typically benefit from broader political consensus. Concerns have been raised that the responsibility for implementing the agreement will fall on the next government, regardless of its views on the deal’s provisions.

Possible Conditions in the Agreement

Although official details remain undisclosed, reports circulating in policy circles suggest that the agreement may include conditions extending beyond tariff reductions. These reportedly involve commitments to diversify Bangladesh’s import sources, reduce reliance on certain countries, and expand purchases from the United States, including in defence and high-value manufacturing sectors.

There is also speculation that Bangladesh may be required to provide smoother market access for US goods, including accepting American technical standards and certifications with limited additional inspection. While such measures could simplify bilateral trade, critics caution that they may have implications for domestic regulation and local industries.

Garment Sector Voices Concern

The garment industry, which employs an estimated four to five million workers—many of them women—has expressed concern over the lack of clarity. The sector contributes more than 80 per cent of Bangladesh’s export earnings and around one-fifth of its overall economic output.

Industry representatives say they have not been formally briefed on the agreement’s contents, making it difficult to assess how production costs, sourcing rules, or compliance requirements might change. Exporters warn that even a small tariff disadvantage compared to India could prompt international buyers to shift orders, with serious consequences for employment and foreign exchange earnings.

“Tariff parity is crucial in a market where price competitiveness determines sourcing decisions,” said a senior garment exporter based in Dhaka. “Without clear information, businesses cannot plan for the future.”

Broader Economic and Political Debate

Economists have also questioned the transparency of the process, arguing that a public discussion of the agreement’s potential benefits and risks is essential. Some have pointed out that concluding such a deal immediately before elections could constrain the policy choices of the next elected government.

The interim administration has maintained that the agreement will safeguard national interests and strengthen trade ties with the United States. Officials have indicated that the deal may be made public later, subject to mutual consent.

As regional competition intensifies and global trade dynamics evolve, the outcome of Bangladesh’s negotiations with the United States is likely to have long-term implications for its export-driven economy. Whether the agreement delivers the balance between competitiveness, transparency, and economic sovereignty remains a central question as the signing date approaches.