A strategic breakthrough in Washington has set a new course for the $36 billion Bangladeshi apparel sector as it navigates the 20 per cent US reciprocal tariff framework. On January 8, 2026, National Security Adviser Dr. Khalilur Rahman and US Trade Representative (USTR) Jamieson Greer discussed an innovative preferential trade arrangement. The proposed scheme would grant tariff-free access to the US market for Bangladeshi apparel exports in direct proportion to the volume of US-produced cotton and man-made fiber (MMF) inputs imported by Dhaka.
Balancing trade deficits through supply chain integration
The initiative seeks to narrow the bilateral trade gap, which stood at approximately $6.1 billion in 2024, by incentivizing Bangladeshi manufacturers to source raw materials from American producers. Under this ‘square-meter for square-meter’ logic, for every unit of US textile input imported, an equivalent volume of finished garments would enter the US duty-free. This addresses a critical pain point; currently, apparel with US content remains subject to the same high reciprocal duties as other goods. By eliminating these costs, the deal could protect nearly $1 billion in annual exports that analysts previously warned were at risk due to tariff-induced pricing shifts.
Strategic compliance and regional competitiveness
This proposal arrives as Bangladesh prepares for its LDC graduation in late 2026, a transition that threatens its duty-free status in other major markets. Ambassador Greer’s commitment to raising these specific tariff reductions with the White House suggests a pivot toward bilateralism to maintain Bangladesh’s position as the third-largest apparel supplier to the US. If executed, the agreement will not only lower the effective 20 per cent tariff but also solidify a resilient, vertically integrated supply chain that bridges American cotton fields with Bangladeshi sewing floors, shielding the sector from regional competitors like Vietnam and India.
The United States is the single largest destination for Bangladeshi readymade garments (RMG), accounting for roughly 18 per cent of the country’s total apparel exports. Bangladesh is also a top-five global market for US cotton exports, enjoying zero-tariff entry for raw fiber. Current growth plans focus on diversifying into MMF-based technical textiles to sustain a 10 per cent annual export increase.
