Is US-BD Trade Agreement Pragmatic for Bangladesh?

Bangladesh and the US government entered into an agreement on reciprocal trade between the United States and Bangladesh. Around 100 countries have signed bilateral agreements separately with the USA to safeguard their export interests, including Bangladesh. The US government reduced the tariff to 20% from 37% after huge negotiation in September 2025. The US has edged it down to 19% in 2026, subject to trade agreement. Apparently, this deal looks like a huge victory for Bangladesh, but this deal is massively unilateral and uneven, as this agreement adopted a non-disclosure agreement at the negotiation stages. 

This recent agreement marks a historic shift from a relationship based on development aid to one defined by quality-focused commercial reciprocity. This agreement is comprehensive, covering not only traditional tariff reduction but also deep structural reforms in labour, intellectual property, digital governance, the financial sector and sector-specific regulatory alignments. It imposes significant compliance burdens, modification of existing rules, and system development that will basically alter the nation’s industrial landscape. 

Our $8.5 billion US market export is led by the RMG, while our import is around $1.5 billion. Considering the multiple importance of the RMG sector at home and abroad, this agreement has been primarily aimed at protecting the RMG industry at the expense of the economy. The agreement mentions zero reciprocal tariffs on apparel, but RMG is not largely benefited due to higher lead time and expensive raw materials. The USA has committed to reducing the countervailing duty on Bangladeshi products from 20% to 19%. This provides a critical competitive advantage over regional rivals who still face high U.S. tariffs. However, this advantage is "reciprocal" and tied to the use of US-produced cotton and man-made fibres. This "yarn-forward" style logic means that local textile backward linkage will encounter a stiff challenge. Our RMG sector has grown globally as a low-cost sourcing hub, and this deal will make us uncompetitive against our peer economies on existing business practices.

The article on food item import may create an upsurge in the price level of the agricultural product in the local market due to US products, directly affecting the consumer of Bangladesh. The section on energy and nuclear power of the agreement may prevent Bangladesh from signing energy deals with other countries. Moreover, this will certainly increase our energy tariff and energy insecurity. $15 billion worth of LNG imports is more expensive than sourcing LNG from traditional sources. Bangladesh usually imports LNG and other forms of energy primarily from GCC economies. Our largest energy investment at Rooppur Nuclear Power Plant may be stuck, as the agreement bars energy sourcing from countries under US sanction.

The Aviation and Defence section aligned Bangladesh's national security infrastructure with U.S. standards and represents a significant geopolitical pivot in its defence acquisition policy. Although our defence system development is an option, it would come with a significant cost and fiscal burden on our economy.

Bangladesh has committed to the purchase of approximately $3.5 billion in agricultural products, including soybeans alongside LNG, 14 Boeing aircraft and technology in the USA. This expensive import may trigger an inflationary hike. This agreement also requires us to prohibit subsidies to Illegal, Unreported and Unregulated (IUU) fishing and ratify this WTO agenda, though this is in negotiation in the WTO, as the fishery sector cannot afford the ratification due to being a subsistent and vulnerable sector. Our pharmaceutical sector may face a transformative challenge as Dhaka has committed to the removal of non-tariff barriers and quotas on US goods. This agreement signals the end of "imitation-based" growth of the pharmaceutical sector, which has thrived under WTO TRIPS waivers.

Our local intellectual property and legal framework are not strong enough to help our local industries to cope, and local businesses require huge preparations to address local IP context. The clauses of IP create a robust standard of IP protection that protects US innovators but limits domestic firms from utilising unlicensed technologies, challenging our local IP regulations.

The agreement also mentioned our State-Owned Enterprises (SOEs), when engaged in commercial activities, act solely in accordance with "commercial considerations" and do not discriminate against US goods. This deal also compels us to perform financing programme commitments with the IMF, which are apparent threats to our financial sector, triggering NPL, public borrowing and governance systems. Elimination of provision of duties immediately on machinery and raw cotton, products like processed food and plastics in five years and B10 products over ten years will drastically reduce state revenue from the US with likely tax incidence on taxpayers.

The section on labour issues is providing extreme privilege for trade unions in the name of labour protection, which may affect our industrial stability and production. This law has been recently amended with huge leverage for labour. Strengthening labour unions in and outside of EPZs and uninterrupted trade union works will hamper smooth industrial productivity. So, Bangladesh will lose its decision-making sovereignty for giving permission to foreign investors with the investment protection clause. 

Trade with countries having US sanctions has been restricted. This will create an international trade imbalance for Bangladesh, crippling our local economy. China and India are two large trading economies of Bangladesh, accounting for 55% of our total imports, and China allows zero import duty on almost 95% of their tariff lines for Bangladesh. Our export and local businesses heavily rely on China as a low-cost source. And this stable trading relation will be at stake with the chance of sanctions if the import price becomes cheaper than that of the USA. The agreement is, to some extent, crippling our trade liberalisation and is an industrial surrender at the price of hollowing out the nation's regulatory and manufacturing independence.

Since this agreement will be effective in the next sixty days, this must be renegotiated to make it more balanced and conducive for Bangladesh. While almost all stakeholders, including the private sector of the country, strongly voice deferral of LDC graduation considering the likely economic impacts, this unilateral agreement is adding fuel to the flame, aggravating our economic crisis. Taking into account the urgent macroeconomic revival of Bangladesh, this unprecedented agreement must be revised to ensure a smooth and friendly economic climate for the private sector, enabling consistent and sustainable economic development in the near future.
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The writer is a macroeconomic and policy research analyst