Iftekhar Rahman
Verdant Global
The economic relationship between the United States and China has entered a more complex phase. It can no longer be understood simply as a conventional tariff dispute. Tariffs remain important, but the contest now extends to technology, industrial capacity, critical minerals, investment screening, digital systems and the security of global supply chains.
US goods trade with China still amounted to an estimated US$414.7 billion in 2025.¹ The scale of this relationship makes complete economic separation unlikely. President Donald Trump’s visit to Beijing in May 2026 produced several measures intended to improve predictability, including proposed US-China boards for trade and investment, commitments relating to critical minerals, an initial purchase of 200 Boeing aircraft and Chinese purchases of at least US$17 billion per year of US agricultural products during 2026 to 2028.²
However, the visit did not resolve the deeper rivalry. Reuters assessed the summit as a return to greater stability without a major strategic breakthrough. China’s commerce ministry subsequently described the announced arrangements as preliminary. ³
The more accurate description is therefore managed competition. Selective commercial engagement will continue, but both countries will seek to reduce vulnerabilities in strategically important sectors.
For Bangladesh, this creates both opportunity and risk.
Bangladesh’s Dual Exposure
The United States remains one of Bangladesh’s most important export markets. US goods imports from Bangladesh reached US$9.5 billion in 2025.⁴ Ready-made garments remain the country’s principal export engine, supporting millions of workers and a wider network of manufacturers, suppliers, banks and logistics providers. According to the World Trade Organization, approximately 18% of Bangladesh’s garment exports went to the United States in 2024, while around 40% went to the European Union. ⁵
China is equally important from another direction. Provisional Bangladesh Bureau of Statistics data for March 2026 ranked China first among Bangladesh’s merchandise-trade partners, accounting for 18.49% of the country’s total merchandise trade during the month. India followed with 9.55%, while the United States accounted for 8.70%.⁶ Chinese commercial relationships remain deeply embedded in Bangladesh’s industrial ecosystem through fabrics, machinery, intermediate inputs and investment.
This dual exposure means that Bangladesh cannot treat the US-China contest as a distant geopolitical development. It is already a national competitiveness issue.
A New Trade Framework with the United States
The Agreement on Reciprocal Trade signed by Bangladesh and the United States on 9 February 2026 has materially changed the policy landscape. For selected originating Bangladeshi goods, the United States will not apply the additional reciprocal tariff. For other originating Bangladeshi goods, the additional tariff will be no higher than 19%, applied alongside the prevailing US most-favoured-nation duty. ⁷
The White House joint statement also provides for a mechanism through which a specified volume of Bangladeshi apparel and textile exports may receive a zero reciprocal-tariff rate in relation to the quantity of US-produced cotton and man-made fibre textile inputs exported to Bangladesh. ⁸
This is an important opportunity, but it should not be misunderstood as a blanket tariff exemption. Commercial benefit will depend on product eligibility, rules of origin, supplier documentation, customs integrity and the ability of Bangladeshi exporters to respond competitively.
The agreement text also stipulates that it will enter into force 60 days after the parties exchange written notifications confirming completion of their applicable legal procedures, unless they decide another date. ⁹ Implementation sequencing therefore matters.
The framework reaches beyond tariffs into digital trade, border procedures, labour and environmental standards, anti-corruption measures, export controls and the treatment of certain strategically sensitive sectors. ¹⁰
If Bangladesh enters into a new bilateral free-trade or preferential economic agreement with a non-market country that undermines the US-Bangladesh agreement, the United States may, following consultations, terminate the agreement and reimpose the applicable reciprocal tariff rate. ¹¹
These provisions do not prevent Bangladesh from maintaining constructive trade, investment or development relationships with China. Nor should they be interpreted as requiring the country to choose one major power over another. They do, however, require disciplined policy coordination.
The Opportunity Is Real, but Not Automatic
Bangladesh has a genuine opportunity to attract additional orders and investment as global businesses diversify their production bases. Yet a shift away from excessive concentration in China does not mean that new business will flow automatically to Bangladesh.
Global buyers compare cost, delivery times, product capability, energy reliability, customs efficiency, labour practices, environmental performance and supply-chain traceability. Bangladesh must therefore compete not only on wages, but also on execution.
The country already possesses a substantial industrial platform. The International Finance Corporation reported that Bangladesh was the world’s second-largest ready-made garment exporter after China in 2023, with a 7.4% global market share. The sector employed more than four million workers and accounted for around 85% of national export earnings in FY2023. ¹²
However, Bangladesh should not position itself merely as a lower-cost alternative. The next stage of competitiveness will require higher productivity, more reliable infrastructure, greater use of advanced and cleaner technologies, and a wider product mix. IFC has highlighted the potential to expand man-made fibre products, while noting that approximately two-thirds of garment-sector output remains concentrated in cotton garments. ¹³ The strategic opportunity is therefore broader than trade diversion. Bangladesh should aim to become a more resilient, compliant and technologically capable production hub.
The Significance of the Anticipated China Visit
The timing is important. Prime Minister Tarique Rahman has received an official invitation to visit China. More recent reporting indicates that the visit is expected to take place in the last week of June 2026. ¹⁴
The anticipated visit follows the May 2026 meeting between the foreign ministers of Bangladesh and China. Their joint press release referred to Belt and Road cooperation, trade, investment, industrial collaboration, the digital economy, health, water-resource management, the Rohingya crisis and the security of navigation through the Strait of Hormuz.
Bangladesh also formally sought Chinese involvement and support for the Teesta River Comprehensive Management and Restoration Project. ¹⁵ The visit may create opportunities for infrastructure development, industrial investment, trade-deficit reduction and wider economic cooperation. Yet the quality of any agreement will matter more than the number of memoranda signed. Commitments should be assessed on commercial merit, affordability and consistency with Bangladesh’s long-term national interests.
The India dimension should also be handled carefully. Bangladesh has a legitimate interest in addressing Teesta-related flooding, erosion and water-management challenges. India remains relevant through geography, trade, transit, energy and regional security. The most sustainable approach is neither confrontation nor avoidance, but transparent engagement with all affected partners.
The Wider Strategic Context
Bangladesh’s choices should not be framed solely through the US-China relationship. The European Union remains the largest destination for Bangladeshi garments. Bangladesh is also scheduled to graduate from least developed country status on 24 November 2026. ¹⁶
Graduation is an important development milestone, but it adds urgency to the reform agenda. The European Union has created a transitional window under which Bangladesh is expected to continue receiving Everything but Arms preferences for three further years, at least until the end of 2029, with an opportunity to seek GSP+ treatment. ¹⁷
That period should be used productively. It is not an indefinite cushion. Bangladesh will need to improve productivity, strengthen labour and environmental compliance, deepen domestic value addition and prepare exporters for more demanding rules of origin.
A Stronger Multilateral Profile
Bangladesh’s multilateral profile has also gained visibility. On 2 June 2026, Foreign Minister Dr Khalilur Rahman was elected President of the 81st session of the United Nations General Assembly. ¹⁸
The office should not be confused with a bilateral negotiating mandate. The President of the General Assembly must serve impartially and guide the work of the 193-member body. Nevertheless, the election enhances Bangladesh’s diplomatic standing at an important moment.
It provides an opportunity to project Bangladesh as a constructive and credible voice for developing economies while strengthening engagement across an increasingly divided international system.
A National-Interest-Based Strategy
Bangladesh does not need to align unconditionally with Washington, Beijing or New Delhi. Its stronger path is a national-interest-based strategy of strategic economic balance.
That approach should protect market access, welcome productive investment, diversify dependencies and preserve the flexibility to engage constructively with all major partners.
The countries that benefit most from the reconfiguration of global supply chains will not necessarily be those offering the lowest wages. They will be those able to combine commercial competitiveness with reliability, compliance, infrastructure and institutional credibility.
References
- Office of the United States Trade Representative, ‘The People’s Republic of China’, accessed 13 June 2026.
- The White House, ‘Fact Sheet. President Donald J. Trump Secures Historic Deals with China, Delivering for American Workers, Farmers, and Industry’, 17 May 2026.
- Michael Martina, David Brunnstrom, David Lawder and Mei Mei Chu, ‘Trump Returns from China with Stability and a Stalemate’, Reuters, 16 May 2026; ‘China Says Trump Visit Deals Are “Preliminary”’, Reuters, 16 May 2026.
- Office of the United States Trade Representative, ‘Bangladesh’, accessed 13 June 2026.
- World Trade Organization, ‘Bangladesh. Working towards a Sustainable Export Future’, accessed 13 June 2026.
- Bangladesh Bureau of Statistics, Foreign Trade Statistics. March 2026, advance release (Dhaka: BBS, June 2026), p. vii.
- Office of the United States Trade Representative, Agreement between the United States of America and the People’s Republic of Bangladesh on Reciprocal Trade, signed 9 February 2026, Annex I, Schedule 2.
- The White House, ‘Joint Statement on United States-Bangladesh Agreement on Reciprocal Trade’, 9 February 2026.
- Office of the United States Trade Representative, Agreement between the United States of America and the People’s Republic of Bangladesh on Reciprocal Trade, signed 9 February 2026, art. 6.6.
- Ibid., arts 2.8-2.11, 3.1-3.4 and 4.1-4.3.
- Ibid., art. 4.3(4).
- International Finance Corporation, Bangladesh. Country Private Sector Diagnostic (Washington, DC: IFC, 2025), pp. 23-24.
- Ibid., pp. 23-24.
- Bangladesh Sangbad Sangstha, ‘Chinese Envoy Invites PM to Visit China’, 23 February 2026; Bangladesh Sangbad Sangstha, ‘Kayser Seeks Chinese Investment in Kunming-Chattogram Road Link’, 12 June 2026.
- Bangladesh Sangbad Sangstha, ‘Bangladesh Seeks China Support for Teesta Project’, 6 May 2026.
- United Nations, ‘Bangladesh Graduation Status’, LDC Portal, accessed 13 June 2026.
- European Commission, ‘Questions and Answers on the New EU Generalised Scheme of Preferences’, 28 April 2026.
- United Nations, ‘General Assembly Elects Khalilur Rahman of Bangladesh President of Eighty-First Session’, 2 June 2026; Bangladesh Sangbad Sangstha, ‘Khalilur Elected President of 81st UNGA Session’, 2 June 2026.
