After India, Bangladesh Signs Trade Deal With US: Should New Delhi Be Worried?

Last Updated:February 10, 2026, 16:05 IST

A look at the Trump tariffs in South Asia and how the US-Bangladesh trade deal could impact India

Days after India’s interim trade agreement with the United States, Bangladesh has secured a reduced 19% US tariff under a trade agreement signed between the two countries on Monday, granting exemptions for some textiles and garments manufactured with US material.

Muhammad Yunus, chief advisor heading Bangladesh’s interim government, said Washington had “committed to establishing a mechanism for certain textile and apparel goods from Bangladesh using US-produced cotton and man-made fibre to receive zero reciprocal tariff in (the) U.S. market".

BANGLADESH AT 19%: THE US DEAL WITH A ZERO-TARIFF WINDOW

The Bangladesh–US trade deal (2026) is a bilateral agreement under which the United States has reduced tariffs on Bangladeshi exports to about 19% and created a zero‑tariff window for certain ready-made garments made in Bangladesh using US-sourced cotton or man-made fibres. In return, Bangladesh has agreed to expand market access for US industrial and agricultural goods, including machinery, dairy, and soy products, while reducing non-tariff barriers. The White House said Bangladesh had agreed to provide significant preferential market access for US industrial and agricultural goods, including chemicals, medical devices, machinery and motor vehicles and parts, soy products and dairy goods, beef, poultry, tree nuts and fruit. Bangladesh will also ease non-tariff barriers by accepting US vehicle safety and emissions standards, recognising US Food and Drug Administration certifications and removing import restrictions on remanufactured goods, the White House added. The deal strengthens Bangladesh’s export competitiveness, especially in the garment sector, which is the backbone of its economy, and deepens its economic ties with the U.S.

The rate had previously been as high as 37% under Trump-era measures.

INDIA AT 18%: WHAT IS THE INTERIM TRADE AGREEMENT WITH US?

The India–US trade deal is an interim bilateral framework aimed at deepening economic ties between the two countries. Under the deal, the United States has agreed to reduce tariffs on many Indian exports to around 18%, with zero duty access for select goods, including pharmaceuticals, gems, and certain engineering products.

In return, India has committed to lowering tariffs on a range of US industrial and agricultural goods, including energy, technology, and certain food products, while also opening markets to US supply chains. The agreement is designed to boost Indian exports, enhance competitiveness in key sectors like textiles and manufacturing, and encourage increased bilateral trade, while laying the groundwork for a broader long-term trade pact. It also carries strategic implications, strengthening India’s position in global supply chains and signaling closer economic alignment with the US.

The United States and India have negotiated a bilateral trade agreement in which Washington has reduced the reciprocal tariff on Indian exports from about 50% down to roughly 18%. This includes removal of punitive levies that were added earlier. The effective average tariff India now pays on US imports has also been cut, while New Delhi has agreed to commit to major purchases of U.S. goods over the next several years. The sharp cut improves Indian exporters’ competitiveness in the U.S. market, especially against regional rivals who still face higher duties. However, it also opens India’s domestic market more to U.S. products (especially in agriculture and industrial goods), which critics say could pressure local producers.

TRUMP TARIFFS IN THE INDIAN SUBCONTINENT

Pakistan (19%): Pakistani goods currently face a US tariff of around 19%. This reflects Trump-era “reciprocal tariffs" applied to countries based on their import duties on US products. Pakistan’s export profile to the U.S. includes textiles, leathergoods, sugar, fruits, and cotton.

Sri Lanka (20%): Sri Lankan shipments to the US are subject to roughly 20% tariff rates, similar to Bangladesh before the new deal. This applies mainly to textiles, apparel, and other manufactured goods.

Afghanistan (15%): Afghanistan’s tariff rate with the U.S. is lower, at about 15%, reflecting tailored tariff treatment rather than the higher “reciprocal tariff" category that many larger exporters face.

SHOULD INDIA BE WORRIED ABOUT BANGLADESH’S DEAL?

1. Zero-Tariff Window in Apparel: Bangladesh now gets zero tariffs on certain garments made with US cotton or man-made fibres. India’s exports to the U.S., including textiles, still face 18% tariffs.

This means, Bangladesh can sell some apparel more cheaply in the US, creating direct competition for Indian textile exporters, especially for mass-market garments, say experts.

2. Raw Material Shifts: Bangladesh can import US cotton/fibres for tariff-free garments. This may reduce demand for Indian cotton exports to Bangladesh, affecting India’s raw material market, say experts.

3. Market Share & Competitive Pressure: Indian textile hubs like Tiruppur, Surat, and Ludhiana could face pressure on orders and margins as US buyers may shift to cheaper Bangladeshi products.

Non-textile sectors are largely unaffected, so India retains an advantage in engineering goods, pharmaceuticals, and other exports.

4. Policy Implications for India: India may need export incentives or production-linked support to maintain competitiveness. Focus may shift to value-added or premium apparel, as Bangladesh dominates the low-cost mass segment, say experts.

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