📈 US-Bangladesh Trade Deal: Implications for Regional Apparel Hubs

Bangladesh has secured a strategic trade agreement with the US, granting zero-tariff access for specific clothing items, a move that reshapes competitive dynamics for South Asian exporters, including Sri Lanka. • Key Tariff Revisions • Headline tariff on Bangladeshi goods cut from 20% to 19%. • Introduction of a zero-tariff mechanism for apparel produced using US-sourced cotton and man-made fibers. • Quota volumes for duty-free entry will be linked to the scale of Bangladesh’s textile imports from the US. • Regional Context & Competition • Bangladesh remains the world's second-largest apparel exporter, with the sector accounting for 80%+ of its export revenue and 4Mn jobs. • The new 19% rate places Bangladesh nearly on par with India (18%), while Sri Lanka currently faces a higher negotiated rate of 20% (down from an initial 44%). • Analysts warn that the "zero-tariff loophole" gives Bangladesh a significant pricing edge over regional peers who rely on non-US raw materials. • Reciprocal Market Access • In exchange, Dhaka will provide "significant preferential access" for US agricultural and industrial goods, including chemicals, medical devices, car parts, and meat. • Bangladesh will also align with US standards for food, drug, and vehicle emissions to facilitate easier entry for American products.