The geopolitical landscape of the South Asian textile trade is undergoing a seismic shift as Bangladesh’s interim government moves to decouple its garment industry from Indian raw materials. Following a landmark trade deal signed in early February 2026, Dhaka has officially announced plans to replace Indian cotton imports with U.S.-grown fiber. This strategic pivot is being hailed as a "game changer" aimed at securing Bangladesh’s dominance in the world’s most lucrative apparel market.
Shafiqul Alam, the information adviser to Chief Adviser Mohammed Yunus, described the agreement as a massive catalyst for the national economy. Under the new terms, Bangladesh secured a general tariff rate of 19%—favorable compared to regional competitors like Indonesia and Cambodia. However, the true incentive lies in a specific "origin-based" clause: the United States has agreed to slash tariffs to zero percent if Bangladeshi manufacturers switch to U.S. cotton or man-made fibers. "This is a big boost," Alam noted. "The zero-tariff incentive provides us with a massive competitive edge that our rivals simply cannot match."
This transition marks a significant departure from long-standing trade patterns. Historically, Bangladesh has relied heavily on India for cotton and yarn, importing $1.6 billion worth of cotton yarn in 2024 alone. However, relations between the two neighbors nosedived in 2025, leading to "tit-for-tat" trade restrictions at land ports. By shifting its focus to the U.S. supply chain, Bangladesh is not only seeking economic gains but also strategic independence from regional supply chain volatility. Interestingly, Bangladesh’s lack of a domestic cotton farming lobby has allowed the government to negotiate this shift without facing internal political resistance.
Despite the enthusiasm, leading economists are urging a cautious approach to the transition. Professor Selim Jehan of BRAC University warned that the allure of "zero tariffs" must be weighed against logistical realities. "On the surface, saving 19% on tariffs is a win, but we must factor in the higher freight charges and longer shipping times associated with U.S. cotton compared to Indian supplies," Jehan explained. He also emphasized that the quality of U.S. fiber must meet the exacting standards of global brands. "In the textile sector, quality is king. If U.S. cotton is not up to the mark, even the tariff savings won't convince American buyers to keep placing orders."
As the global fashion industry watches closely, Bangladeshi textile majors are now beginning to renegotiate their sourcing contracts. If successfully executed, this deal could permanently alter global cotton flow, moving Bangladesh away from its neighbors and weaving it tighter into the American economic orbit. The coming months will determine if the cost-benefit analysis of "White Gold" from the West truly pays off for the world’s second-largest garment exporter.
