Bangladesh avoids steep US tariffs, secures 20% rate after high-stakes negotiations

 Bangladesh has successfully secured a 20% tariff rate on exports to the United States, averting a potentially crippling 35% duty that had been threatened just weeks earlier. The final agreement places Bangladesh on a level playing field with key apparel-exporting nations, including Vietnam, Sri Lanka, Pakistan, and Indonesia, which also received tariff rates in the 19–20% range.

The breakthrough came after months of intense talks, with negotiators balancing trade concessions and national priorities under pressure from a rapidly approaching US-imposed deadline.

“Today, we successfully avoided a potential 35% reciprocal tariff. That’s good news for our apparel sector and the millions who depend on it,” said Dr Khalilur Rahman, Bangladesh’s National Security Advisor and chief negotiator. “We’ve also preserved our global competitiveness and opened up new opportunities to access the world’s largest consumer market.”

The talks were part of a broader U.S. effort, spearheaded by President Donald Trump, to impose new trade terms on 70 countries. These terms extended beyond tariffs to include purchase agreements, policy shifts, and national security cooperation. Countries unwilling to meet the new conditions faced punitive tariffs as high as 41%.

Bangladesh faced that threat directly when President Trump issued a formal letter on July 9, warning that a 35% tariff would take effect on August 1 unless a bilateral deal was reached.

The 20% final rate represents a significant climbdown from that figure.

“By reducing the tariff to 20%, 17 points lower than anticipated, our negotiators have demonstrated remarkable strategic skill and unwavering commitment to safeguarding and advancing Bangladesh’s economic interests,” said Chief Adviser Muhammad Yunus in a statement congratulating the negotiation team.

Bangladesh agreed to boost imports of U.S. agricultural products, including wheat, soybeans, and cotton—moves aimed at narrowing a $6 billion trade deficit with the U.S. It has already committed to purchasing 700,000 tonnes of wheat annually. Additional purchases are expected in LNG and aviation sectors, including plans to buy 25 Boeing aircraft.

A Bangladeshi official involved in the talks revealed that the U.S. also requested increased purchases of military equipment. “We said, we are diversifying the purchase of military equipment. We are also buying from Turkiye and Eastern European countries. The quality of U.S. military equipment is good, but the price is high. If we can, we will buy from the United States,” the official said.

Washington also raised concerns over Bangladesh's growing trade with China. “We have said that China is our neighbouring trading partner. We are not part of any circle,” the official added.

The final deal reflects the complex matrix of trade, diplomacy, and security shaping global commerce. Under the Trump administration’s executive order, each country’s tariff rate was calibrated based on its readiness to meet U.S. expectations on both commercial and strategic fronts.

Bangladesh’s outcome is seen as a diplomatic win.

“This achievement not only underscores Bangladesh’s rising strength on the global stage but also opens the door to greater opportunities, accelerated growth, and lasting prosperity,” said Chief Adviser Yunus.

Negotiators worked through months of technical discussions, navigating sensitive issues ranging from non-tariff barriers to national security. “We negotiated carefully to ensure that our commitments aligned with our national interests and capacity,” said Dr Rahman.

The apparel industry, which supports millions of jobs and is a cornerstone of Bangladesh’s export economy, remains shielded from major disruptions, at least for now.

“As a result, Bangladesh's relative competitiveness in apparel exports remains unaffected,” the Chief Adviser’s Press Wing stated.