In a landmark move for South Asian trade, Bangladesh and the United States signed the “Agreement on Reciprocal Trade” on February 9, 2026. This historic deal provides a critical lifeline to Bangladesh’s apparel sector by introducing zero-tariff access for specific textile goods, effectively ending a period of high-duty uncertainty.
Below is an SEO-optimized breakdown of the agreement and its impact on the global textile market.
Key Highlights: The 2026 US-Bangladesh Trade Deal
The agreement, signed by Bangladesh’s Commerce Adviser Sheikh Bashir Uddin and US Trade Representative Jamieson Greer, marks a “historically new level” of bilateral relations.
| Feature | New Policy (Feb 2026) | Previous Status |
| General Reciprocal Tariff | 19% | 20% (reduced from 37% in 2025) |
| Targeted Textile Tariff | 0% (Zero Tariff) | 20% |
| Qualifying Condition | Use of US-produced cotton or man-made fiber | None (Standard Origin) |
| Commercial Pacts | 14–25 Boeing aircraft; $15B energy deal | N/A |
The “Zero Tariff” Mechanism: How It Works
The standout feature of this deal is the Zero Reciprocal Tariff window for the Readymade Garments (RMG) sector. However, this benefit is “reciprocal” and comes with specific strings attached:
- US Input Requirement: To qualify for 0% duty, Bangladeshi manufacturers must use US-sourced raw materials, specifically American cotton and man-made fibers.
- Volume-Based Quotas: The US will establish a mechanism where the volume of zero-duty exports allowed into the American market is linked directly to the quantity of US textile inputs Bangladesh imports.
- Strategic Alignment: The deal is seen as a way for the US to secure a major market for its agricultural exports (cotton, wheat, soy) while supporting Bangladesh’s economic recovery following the 2024 political transition.
Economic Impact & Market Shift
1. A Boost for the RMG Sector
The RMG industry accounts for over 80% of Bangladesh’s export earnings and 10% of its GDP. With over 4 million workers (predominantly women), the zero-tariff incentive is expected to provide “substantial added impetus” to a sector that had been struggling with high costs and regulatory hurdles.
2. Regional Competition (India vs. Bangladesh)
The deal has created a significant stir in the region. While India recently secured a trade deal with the US, its textile exports still face an 18% tariff. By securing a 0% window (albeit with US cotton requirements), Bangladesh has neutralized India’s previous competitive edge in the American market.
3. Broad Market Access
Beyond textiles, Bangladesh has agreed to:
- Open its markets to US chemicals, medical devices, and machinery.
- Accept US safety standards for motor vehicles.
- Remove import restrictions on remanufactured goods.
Conclusion: A “Win-Win” for 2026?
For the interim government led by Muhammad Yunus, this deal is a massive diplomatic victory just days before the scheduled February 12 general elections. For the US, it secures a strategic partner in South Asia and a guaranteed buyer for $3.5 billion in agricultural products and $15 billion in energy.
