Bangladesh offers tariff relief on 626 products ahead of US trade talks

In response to additional duties imposed by the United States on Bangladeshi exports, the government is planning to offer tariff relief on 626 products as part of preparations for trade dialogue and to gradually reduce trade imbalances with the US.

Finance Advisor Salehuddin Ahmed proposed a full withdrawal of import duties on 110 of these products.

Presenting the proposed national budget for the 2025–26 fiscal year on Monday, the advisor said: “In order to gradually reduce the taxes and duties and as part of preparations for trade dialogue with the United States, it has been proposed to completely withdraw import duties on 110 products and reduce import duties on 65 products."

"In addition, supplementary duties on 9 products are proposed to be fully withdrawn, while those on 442 products are proposed to be reduced. This will ease the tax burden on citizens and reduce anti-export bias."

The list of items with duty exemptions includes various types of yarn, nuclear reactors and their components, boilers, hydraulic turbines, gas turbines, milking machines and dairy farm equipment, machines for making wine, cider and fruit juices, sugar mill machinery, poultry egg incubators and brooders and their parts, spinning mill and bakery equipment, and MRI machines.

The budget proposal also includes zero import duty on certain weapons such as rifles, howitzers, mortars, rocket launchers, flamethrowers, grenade launchers, and torpedo tubes. These items previously carried a 5 per cent import duty in the outgoing fiscal year.

The move comes as Bangladesh faces a trade deficit of approximately $6 billion with the US, meaning the country exports $6 billion more to the US than it imports from there.

On Apr 2, US President Donald Trump announced a new "reciprocal tariff" policy, introducing new tariffs on imports from over 100 countries. Under this, Bangladeshi exports to the US would face a 37 per cent supplementary duty.

Previously, the average US tariff on Bangladeshi goods was about 15 per cent. Combined, this would increase the total duty on Bangladeshi exports to 52 per cent.

Following a request from Bangladesh, the additional 37 per cent duty was temporarily suspended for three months. However, the country must still pay the existing 15 per cent tariff along with an additional 10 per cent.

Business leaders fear this added burden could reduce Bangladesh’s export competitiveness in the US, which remains its largest market for ready-made garments (RMG). In 2024, Bangladesh exported $8.4 billion worth of goods to the US, of which $7.34 billion was in apparel alone.

To avoid the burden of higher tariffs, Bangladesh must work to reduce its trade deficit with the US.

To that end, Commerce Advisor Sheikh Bashiruddin announced on Apr 8 that Bangladesh had written to the US government offering to grant duty-free access to another 100 US products.

To offset the trade imbalance, Bangladesh has already waived import duties on 190 US products.