US President Donald Trump’s tariff policy, widely known as the Trump Tariff, has emerged as a defining feature of global geopolitics in recent months. After several rounds of negotiations, many countries managed to secure comparatively favorable or tolerable rates—critical for protecting their market access to the US economy. For South Asian states, which mostly export labor-intensive products and remain heavily dependent on the US market, the tariff standoff initially created confusion, scepticism, and anxiety. Yet, following a three-month pause, the outcomes of negotiations across the region have brought both “relief” and “surprise.”

Bangladesh has secured a 20 percent “tolerable” tariff concession, placing the fast-growing South Asian nation ahead of its main competitors. By contrast, the US imposed an additional 25 percent reciprocal tariff on India for buying Russian oil without Washington’s consent. This raised India’s effective tariff rate to 50 percent—a major surprise for many observers of India-US relations.

The interim government in Dhaka skillfully managed tough negotiations with the US Trade Representative’s office, securing concessions that shielded the country’s vital Ready-Made Garments (RMG) sector. As a result, Bangladeshi RMG exports to the US rose by 25 percent to $4.25 billion in the first half of 2025.

Initially, Bangladesh faced a burdensome 35 percent retaliatory tariff, which would have pushed the total rate to 50 percent. But through diplomatic maneuvering, it negotiated this down to 20 percent—on par with Vietnam and Sri Lanka, and far below India’s 50 percent. Pakistan secured a 19 percent rate, while Sri Lanka and Vietnam both remained at 20 percent. Afghanistan managed 15 percent, while Nepal and Bhutan received the lowest baseline tariff at 10 percent. However, most of these countries lack the export volumes or competitiveness of Bangladesh, India, Pakistan, or Vietnam—the latter an extra-regional giant in the RMG sector.

Bangladesh’s achievement becomes even clearer when compared with trade deficits. Despite limited privileges, Bangladesh has only a $5.7 billion trade imbalance with the US, in contrast to India’s much larger $41.5 billion deficit. Dhaka successfully argued that its relatively modest deficit warranted preferential treatment.

Skillful Negotiations 

Under the leadership of Chief Adviser Muhammad Yunus and Commerce Adviser Sheikh Bashir Uddin, Bangladesh pursued a pragmatic diplomatic strategy. Their efforts aligned mutual interests, even as Dhaka had to make compromises to secure American concessions.

The benefits of this approach are visible. Demand for Bangladeshi garments in the US has surged as American buyers move away from China and India, hit by higher tariffs. Bangladesh’s share of the $85 billion US apparel market reached 10.03 percent by May 2025. Exports jumped 45 percent in June alone, reaching $722.54 million. With this momentum, Bangladesh is outpacing most of its major rivals in export growth to the US.

Dhaka also agreed to expand economic cooperation with Washington. It committed to purchasing 700,000 tons of US wheat annually, boosting food security while supporting American farmers. Increased US cotton imports and new cotton warehouses in Bangladesh are strengthening the textile industry’s dependence on American raw materials. Additionally, agreements on liquefied natural gas (LNG) purchases will help diversify Bangladesh’s energy portfolio. Bangladesh also opened its market for US dairy, beef, and poultry products destined for the EU, giving Washington new trade avenues. Duty-free import of certain US items further signals Dhaka’s shift toward liberalized trade practices.

Commerce Secretary Mahbubur Rahman has indicated that the government is working to reduce the tariff rate further, to 15 percent, through sustained diplomacy. Such efforts, he argued, will cement Bangladesh’s position as Washington’s preferred trading partner in South Asia.

Indian, Chinese Interests

Meanwhile, several Indian export firms have begun approaching Bangladeshi manufacturers to produce apparel jointly, underscoring Dhaka’s emerging advantage after US tariff hikes on India and China.

Chinese investors, too, are showing interest in building garment factories in Bangladesh, drawn by its new trade advantage. Bangladesh, by capitalizing on India and China’s relative “disadvantage” now has the opportunity to expand its export footprint. For India, however, the trajectory of its ties with Washington will depend on the outcome of sensitive diplomatic negotiations in the months ahead.

Challenges, however, remain. The US apparel market has already shrunk from $105 billion to $85 billion, with projections of a further fall to $75 billion. Even so, Bangladesh’s comparative advantage means it can claim a larger share of a smaller market, while its competitors struggle.

In contrast, India’s sudden penalty shocked analysts, while Pakistan quietly secured a favorable deal. Other South Asian countries, despite receiving lower tariff rates, lack significant market presence in the US.

(The author, an executive officer at the People’s University of Bangladesh, is a post-graduate from the Department of International Relations, University of Dhaka. Views expressed are personal. He can be contacted at jaidulkarimiram@gmail.com.)