The New Nation Explainer: Why Bangladesh betting on US wheat to ease tensions?

NN Special :

Bangladesh has recently approved the import of U.S. wheat, aiming to ease escalating tensions with Washington over trade imbalances and threatened tariffs.

This decision, while rooted in agricultural procurement, is fundamentally about geopolitics and economic leverage.

The backstory begins with mounting pressure from the U.S. government regarding its significant trade deficit with Bangladesh.

As of 2024, Bangladesh exported goods worth over $8 billion to the United States largely in the form of ready-made garments (RMG) – but imported just over $2 billion worth of goods in return.

This growing imbalance triggered frustration in Washington, particularly under the Trump administration’s “America First” economic policy, which emphasized reciprocal trade.

In early 2025, the U.S. threatened to impose up to 35% tariffs on Bangladeshi exports, a move that would severely impact the country’s garment sector, which employs millions and accounts for over 80% of its export earnings.

Bangladesh has taken a proactive approach by increasing its imports from the U.S. across several strategic sectors, including agriculture, aviation, and energy.

One of the most high-profile steps was the approval of U.S. wheat imports under a five-year government-to-government memorandum of understanding (MoU), signed in July 2025.

Under this agreement, Bangladesh will import up to 700,000 metric tons
of U.S. wheat annually.

The first phase includes the procurement of 220,000 metric tons at prices ranging from $302.75 to $308 per ton notably higher than wheat sourced from the Black Sea region.

According to a Reuters report published on October 7, 2025, the wheat deal is part of a broader effort by Bangladesh to demonstrate goodwill toward the United States and gain leverage in ongoing trade talks.

Citing a senior commerce ministry official, the report explains that Bangladesh believes these imports could play a role in reducing U.S. pressure to impose steep tariffs.

The same official confirmed that the wheat shipment would come from Corpus Christi, Texas, and is expected to arrive at Chattogram Port by mid-October.

In parallel, Bangladesh has also placed a $3 billion order for 25 Boeing aircraft and expanded its imports of U.S. cotton and soybean oil – further emphasizing its intent to close the trade gap.

This move is not only about trade politics; it also addresses practical concerns around food security. Bangladesh’s domestic wheat production stands at around 1.1 million tonnes per year, while its national demand exceeds 7 million tonnes.

Despite the benefits, the move is not without criticism. Analysts and importers have raised concerns over the cost-effectiveness of the decision. U.S. wheat is significantly more expensive than its Black Sea counterparts, and critics argue that the government is effectively overpaying as part of a political compromise.

The Financial Express noted that the government’s wheat purchase from the U.S. could be Tk 300-400 per tonne costlier than comparable global market prices.

In a country where millions depend on subsidized food and the public distribution system is often under financial strain, such extra costs may have downstream impacts.

Even so, the decision appears to be yielding diplomatic returns. Within weeks of the wheat deal and aircraft order, the United States revised its proposed tariff increase – reducing it from 35% to 20% on Bangladeshi RMG exports.

While not a complete rollback, the softening indicates that Bangladesh’s strategy of using strategic imports as diplomatic leverage is working, at least in the short term.

Furthermore, Bangladesh’s willingness to buy American wheat is part of a wider government effort to elevate bilateral relations with the U.S. beyond trade.

Washington has been increasingly vocal about governance, labor rights, and human rights issues in Bangladesh, and there have been tensions over election-related sanctions.

While not officially acknowledged, increasing economic engagement may help ease the political friction as well. Trade, after all, remains one of the most powerful tools of diplomacy.

That said, the long-term sustainability of this approach remains uncertain. Bangladesh’s economy is under pressure from high inflation, foreign exchange volatility, and rising debt.

Committing to expensive imports purely for political purposes could become a financial burden if not managed carefully.

For now, the wheat deal stands as a powerful example of economic diplomacy in action.

It shows how a developing country like Bangladesh can navigate asymmetrical trade relations with a global superpower through a mix of strategic purchasing, diplomatic signaling, and calculated risk.

In the coming months, the success of this strategy will depend on several factors: whether the U.S. further reduces tariffs, how the wheat imports are integrated into domestic distribution, and whether the quality and pricing meet local needs.

If successful, the approach could become a model for other export-reliant economies seeking to balance trade relations in a multipolar and often protectionist world.