Bangladesh plans to import more cotton from the United States as a way to fend off possible tariffs.
It’s a strategic move, foreign affairs adviser Md. Touhid Hossain said this week, amid the Trump administration’s proposed efforts to narrow the trade deficit with other countries, a longtime obsession of the president.
In 2024, the United States imported $8.4 billion worth of goods from the South Asian nation, which, in turn, received $2.2 billion in American exports, according to the Office of the U.S. Trade Representative. This created a trade deficit of $6.2 billion, or 2 percent more than the $6 billion from the year before.
President Donald Trump has frequently cited trade surpluses as evidence that America is “being ripped off” by the rest of the world.
Bangladeshi goods are already subject to U.S. tariffs, including a 15.6 percent duty on apparel. The idea, Hossain said, is to prevent additional tariffs that the White House might be eyeing.
“The U.S. government has imposed tariffs on various countries since Donald Trump took office,” he was quoted by the Dhaka-based Business Standard as saying at a joint Economic Reporters Forum and the Bangladesh Cotton Association event. “By importing cotton from the U.S. and exporting garments made from it, we aim to create a situation where they hesitate to impose higher tariffs on us.”
The United States is Bangladesh’s third-largest trading partner after China and India. Similarly, Bangladesh is America’s No. 3 supplier of clothing after China and Vietnam. In a recent letter to interim leader Muhammad Yunus that urged stronger protections for workers following the ouster of disgraced former prime minister Sheikh Hasina, the American Apparel & Footwear Association and the Fair Labor Association said that the “favorable trade partnerships and spirit of collaboration that underpin these markets [have] brought shared prosperity and economic growth.”
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But Hossain also said that it was important for Bangladesh to shore up its domestic production of cotton, which despite being a major cash crop, is cultivated in small quantities that meet only 3 percent of the national demand. While he said that the interim government would soon recognize cotton as an agricultural product and introduce subsidies to drive its uptake, potentially within the next three months, he also urged Bangladesh’s National Board of Revenue to eliminate the current 4 percent advance income tax on domestically produced cotton.
Vietnam has also been scrambling to ward off trade deficit-propelled tariffs. Last week, officials from Hanoi met with U.S. Trade Representative Jamieson Greer in Washington, D.C., to discuss how the two nations could achieve “commensurate economic benefits,” including by removing trade barriers that impede American investment and business in Vietnam.
But Bangladesh has another problem on the horizon: graduation from the United Nations’ Least Developed Countries category next November, resulting in the ceding of trade benefits from the European Union that could jack up tariffs on apparel imports from nil to roughly 12 percent by 2029.
“Even after LDC graduation, Bangladesh will enjoy duty-free access to the European Union for three more years. I believe our business community is waiting for this grace period to make necessary preparations, and I am confident they will be ready within that timeframe,” Hossain said.
How much Bangladesh’s plans would help U.S. cotton farmers remains to be determined. China has slapped an additional 15 percent tariff on U.S.-grown products, including cotton, in response to Trump’s order to raise duties on Chinese imports to 20 percent. Farmers, many of whom have seen federal grants frozen as billionaire Elon Musk’s so-called Department of Government Efficiency conducts its cost-cutting review, are also facing escalating equipment and input costs—including from retaliatory tariffs—and sinking commodity prices.
The U.S. Department of Agriculture said on Tuesday, however, that it is issuing up to $10 billion directly to agricultural producers through the Emergency Commodity Assistance Program for the 2024 crop year to help agricultural producers mitigate these effects. Farmers of upland cotton and extra-long staple cotton will be eligible for payments of $84.74 per acre.
“Producers are facing higher costs and market uncertainty, and the Trump Administration is ensuring they get the support they need without delay,” Secretary of Agriculture Brooke Rollins said in a statement. “With clear direction from Congress, USDA has prioritized streamlining the process and accelerating these payments ahead of schedule, ensuring farmers have the resources necessary to manage rising expenses and secure financing for next season.”