Bangladesh has negotiated a 20% tariff on exports to the U.S., down from the 37% initially proposed by U.S. President Donald Trump, bringing relief to exporters in the world’s second-largest garment supplier.
The new rate is in line with those offered to other major apparel-exporting countries such as Sri Lanka, Vietnam, Pakistan and Indonesia. India, which failed to reach a comprehensive agreement with Washington, will face a steeper 25% tariff.
Trump put steep tariffs on exports from dozens of trading partners, including Canada, Brazil, India and Taiwan, ahead of a Friday trade deal deadline.
The outcome secured by Bangladesh - home to a $40 billion apparel export sector - reflects careful negotiation, said Khalilur Rahman, national security adviser and lead negotiator.
Trump announced new tariffs of up to 41% on goods imported from dozens of countries, including Pakistan, citing persistent trade imbalances and a lack of reciprocity in bilateral trade relationships.
“Conditions reflected in large and persistent annual US goods trade deficits constitute an unusual and extraordinary threat to the national security and economy of the United States,” the executive order states.
Pakistan’s revised tariff rate of 19% is lower than that of several regional economies, including India (25%), Bangladesh (20%), Vietnam (20%), and Sri Lanka (20%).
“The new deal is expected to enhance market access for Pakistani goods, particularly in textiles and apparel,” Waqas Ghani, Head of Research at JS Global, told Business Recorder.
The analyst was of the view that this move could significantly boost export earnings and support industrial growth, which remained dull in the outgoing fiscal year.
“Pakistan will also begin importing crude oil from the US, which is a strategic shift in Pakistan’s energy procurement strategy, helping the country diversify its oil sources,” added Ghani.
“The relative advantage over many other countries sends a strong signal that the world acknowledges Pakistan’s improved fundamentals.”
The development came a day after the US administration struck a deal with Pakistan, in which Washington would work with Islamabad to develop the South Asian nation’s oil reserves.
“We have just concluded a Deal with the Country of Pakistan, whereby Pakistan and the United States will work together on developing their massive Oil Reserves,” Trump wrote on social media.
“We are in the process of choosing the Oil Company that will lead this Partnership. Who knows, maybe they’ll be selling Oil to India some day!”
Islamabad described the deal as a marker of a broader partnership with Washington. Finance Minister Muhammad Aurangzeb, who led the final round of talks, said there was a larger economic and strategic agreement.
“From our perspective, it was always going beyond the immediate trade imperative, and its whole purpose was, and is, that trade and investment have to go hand in hand,” he said, in video-taped remarks.
However, Topline Securities, a brokerage house, considered the trade deal ’’neutral“ for Pakistan, which would help the South Asian nation remain competitive with direct competitors, albeit no significant advantage over peers.
“Pakistan companies will have to continue investing in their R&D, energy efficiency and business development to maintain their market share,” the brokerage house said.
That said, final decisions on tariff rates for China—currently the largest supplier to the U.S.—remain pending. This will further determine the competitiveness of Pakistan and other countries, Topline noted.
Pakistan faced a potential 29% tariff on exports to the United States under tariffs announced by Washington in April on countries around the world. Tariffs were subsequently suspended for 90 days so negotiations could take place.
Islamabad’s trade surplus with Washington was around $3 billion in 2024, mainly due to textile exports. The United States is Pakistan’s biggest market for textiles.
In the textile sector, Pakistan primarily competes with China, India, Vietnam, Cambodia, Indonesia, and Bangladesh, said Topline.
While the initial duties imposed on China, Cambodia, Indonesia, Vietnam, and Bangladesh were significantly higher than those on Pakistan, it noted that the revised tariffs have largely levelled the playing field.
“The revised duties are more or less equal to Pakistan, thus leaving no competitive edge to Pakistan, in our view, except for cheaper labour.”