US rises, India slips in Bangladesh trade

Bangladesh is increasingly shaping its trade diplomacy around economic interests as geopolitical shifts reshape its commercial ties with major powers. The United States has overtaken India as Bangladesh’s second-largest trading partner after 16 years, while China continues to dominate by a wide margin.

National Board of Revenue (NBR) data show that Bangladesh’s total merchandise trade with the US reached $12.67 billion in the 2025-26 financial year, compared with $10.72 billion with India. Trade with the US was therefore $1.95 billion higher.

The shift was driven largely by a 43 per cent rise in Bangladesh’s imports from the US, alongside declines in both imports from and exports to India.

It also reflects wider geopolitical and diplomatic developments, including negotiations over US reciprocal tariffs, commitments under a bilateral trade agreement and changing Bangladesh-India trade relations.

Bangladesh exported goods worth $9.11 billion to the US in 2025-26 and imported $3.56 billion, resulting in a trade surplus of about $5.55 billion.
Imports from the US increased from $2.49 billion to $3.56 billion, while export growth slowed to around 4 per cent from 14 per cent in the previous financial year.

The US imposed reciprocal tariffs on Bangladeshi products in 2025 under President Donald Trump’s policy to reduce the US trade deficit. Following negotiations, the tariff was initially set at 20 per cent and took effect on August 7.

Bangladesh and the US subsequently signed a reciprocal trade agreement on February 9 this year. Under the agreement, Bangladesh committed to purchasing around $3.5 billion worth of agricultural products, approximately $15 billion of energy products over 15 years, as well as 14 Boeing aircraft and military equipment.

Biman Bangladesh Airlines signed an agreement with Boeing on April 30 to purchase 14 aircraft, while discussions have also taken place over a possible additional purchase of 11 aircraft.

The agreement provides for reciprocal tariffs to be reduced to zero on specified quantities of textiles and garments made in Bangladesh using US raw materials. The implementation framework for this benefit has yet to come into effect.

Bangladesh nevertheless increased its purchases of US goods before the agreement was fully implemented. Government purchases of wheat and LNG rose, while private-sector imports of soybean seeds and cotton also increased.

Bangladesh imported no wheat from the US in 2024-25, but purchases reached $227.7 million in 2025-26. Soybean seed imports rose from $350 million to $620 million, cotton imports from $230 million to $380 million, and government LNG purchases reached around $480 million.

Trade with India moved in the opposite direction. Bangladesh has traditionally relied on India for cotton, yarn, food products, industrial raw materials and intermediate goods because of geographical proximity and lower transport costs.

However, bilateral trade declined in 2025-26.
In March 2025, Bangladesh stopped importing yarn from India through land ports. India subsequently withdrew a facility allowing Bangladeshi goods to be exported to third countries through Kolkata airport.

India also introduced restrictions on Bangladeshi imports in three phases, covering garments, food items, jute products, cotton and yarn waste, plastic goods and wooden furniture.

Further restrictions were imposed on some jute products in August, alongside an investigation into possible remedial duties on Bangladeshi jute products.

Bangladesh’s garment exports to India fell 12 per cent to about $570 million from around $650 million. Cotton imports declined 23 per cent from $520 million to $400 million, while cotton yarn imports fell from $1.75 billion to $1.47 billion.

NBR data show exports to India fell around 3 per cent and imports about 7.5 per cent to $8.96 billion. Overall bilateral trade dropped by about $770 million, or 7 per cent, to $10.72 billion.

Experts say Bangladesh normally chooses suppliers based on international prices, quality, transport costs and supply reliability. However, diplomatic relations and trade agreements are increasingly influencing purchasing decisions.

China remains Bangladesh’s largest trading partner. Total merchandise trade reached $22.96 billion in 2025-26, about 81 per cent higher than trade with the US.

Bangladesh imported $22.14 billion from China, up around 7 per cent, while exports stood at $820 million, up around 11 per cent.

China remains a major source of machinery, industrial raw materials and other inputs for Bangladesh’s manufacturing sector.

Overall, Bangladesh’s merchandise trade stood at $119.38 billion in 2025-26, with imports of $73.12 billion and exports of $46.26 billion. China accounted for around 19 per cent, the US 11 per cent and India 9 per cent of total trade.

Experts caution that trade deficits alone do not capture the benefits of imports, as much of the raw materials and intermediate goods sourced from China and India support export-oriented industries.

The gains from expanding trade with the US will depend partly on implementation of promised tariff concessions and their impact on production costs and supply chains.

Future trade with India will likewise depend on political relations, transport costs, delivery times and access to industrial raw materials.