Bangladesh may have signed on the dotted line, but in the trade tug-of-war with the United States, it looks like Washington came out the clear winner, as per a GTRI report. The recently announced US–Bangladesh deal offers conditional benefits for Dhaka, but at a cost that may far outweigh the gains.
The joint statement released on 9 February 2026 says the US will cut its reciprocal tariff on Bangladeshi goods to 19% and provide zero-duty access “only for garments made with US-origin cotton and man-made fibres”.
On paper, this seems generous. In reality, it is far more restrictive.
For a typical Bangladeshi garment, currently facing a 12% US MFN tariff, the total duty under the new deal would reach 31% (12% MFN + 19% reciprocal). If, and only if, the garment uses US fibres, the duty drops to 12%.
“While this appears to be a significant concession, Bangladesh’s export structure and its heavy dependence on non-US textile inputs mean the arrangement is likely to result in only a limited increase in garment exports to the US,” notes the GTRI report.
Bangladesh exported $50.9 billion in garments globally in 2024, dwarfing India’s $16.3 billion. But the US is a minor player for Dhaka: just $7.4 billion of its garment exports went to America.
By contrast, the European Union accounts for over 63% ($32.3 billion) of Bangladesh’s garment trade, and that’s already duty-free, without any sourcing restrictions.
In short, Bangladesh’s garment supply chains are built to serve Europe, not the US, making the shift to US-linked fibres economically unattractive.
Bangladesh depends heavily on imported textile inputs, and the U.S. plays only a minor role. In 2024, the country imported $16.1 billion worth of fibres, yarns, and fabrics. China led the pack with $9 billion, India contributed $3.1 billion, and the U.S. supplied just $274 million.
Cotton fibre: Of the $2.5 billion imported, the U.S. supplied $255 million. India ($655 million) and Brazil ($604 million) were the major suppliers, dominating the market.
Cotton yarn: India provided $1.6 billion of the $1.8 billion total, highlighting Bangladesh’s dependence on regional suppliers for this critical input.
Fabrics: China dominates the fabric segment. For woven synthetic filament fabrics ($1.4 billion total), China supplied $1.1 billion, while the U.S. contributed $88 million. For woven cotton fabrics ($1.3 billion total), China supplied $601 million and India $194 million. The pattern is similar for synthetic filament yarn, with China supplying $329 million out of $442 million total, and India $53 million.
The upshot: less than one-third of Bangladeshi garments start from fibre; most rely on imported yarn and fabric. To qualify for the U.S. zero-tariff benefit, Bangladesh would need to rebuild significant spinning and fabric-processing capacity -- a massive investment it currently lacks.
The trade-off
Meanwhile, Bangladesh has opened its doors wide to US industrial and agricultural goods, agreeing to:
Buy about $3.5 billion in US farm products,
Commit to long-term purchases of US energy and aircraft,
Rely more heavily on US cotton as both an import and a gatekeeper for apparel access,
Accept extensive compliance obligations on labour standards, forced-labour bans, customs digitisation, cross-border data flows, and intellectual-property enforcement.
The deal’s design gives Washington deep oversight over Dhaka’s export sector, while the practical gains for Bangladesh’s garment industry are modest at best.
“Since the EU absorbs nearly two-thirds of Bangladesh’s garment exports and already offers unconditional zero-tariff access, the incentive to restructure supply chains mainly for the US market is weak,” GTRI founder Ajay Srivastava observes.
“As a result, the US zero-tariff offer for garments made with American fibres is likely to lead only to marginal increases in Bangladesh’s garment exports to the United States, and is more likely to boost US cotton exports than transform Bangladesh’s apparel exports to the US market.”
Bangladesh has conceded far more than it stands to gain. The costs of restructuring supply chains, meeting compliance obligations, and committing to long-term US purchases may soon make Dhaka question the wisdom of this lopsided bargain.
Source Name ; Economic Times