One year after its Gen Z-led revolution, Bangladesh finds itself at a fragile crossroads. While its interim government, led by Muhammad Yunus, has stabilized the country and initiated reforms, major challenges remain. Delayed elections, emboldened Islamist parties, difficulties in the implementation of reforms and ensuring accountability for past abuses, escalating lawlessness, a battered economy, and a prolonged refugee crisis all threaten to derail the country’s democratic renewal.
Washington’s longstanding partnership with Dhaka – built on democratic support, trade, development, humanitarian assistance, and security cooperation – has been strained at precisely the wrong time. Through aid cuts, tariffs, and an unpredictable strategic outlook since the start of 2025, U.S. influence in Bangladesh has been weakened just as China has sought to increase its footprint. To prevent backsliding and to counter Beijing’s growing role, the U.S. must renew its commitment to supporting Bangladesh in its transition period and beyond. Doing so will help ensure Bangladesh becomes a stable and independent democracy that is free from Islamist extremism and able to resist Chinese economic coercion, thereby reinforcing U.S. leadership in upholding stability and prosperity in South Asia.
Fragile Democracy
Although Bangladesh’s interim government has laid the groundwork for structural reforms, through the establishment of key reform commissions and the recent adoption of the July Charter, its political landscape remains fractured. The Bangladesh Nationalist Party (BNP), marginalized under Sheikh Hasina’s regime, demands swift elections, while the student-led National Citizen Party (NCP) calls for deep constitutional change. Formerly banned Islamist factions like Jamaat-e-Islami are reemerging, sparking fears of radicalization and erosion of Bangladesh’s secular foundations.
A temporary ban on Hasina’s Awami League (AL), alongside Operation Devil Hunt – a sweeping crackdown targeting former Hasina loyalists, resulting in over 48,000 arrests – has raised concerns about a renewed iteration of retributive, exclusionary politics. At the same time, social tensions are surging, with over 2,400 attacks on minorities and women, weapons theft, assaults on and by police, and rising extremist propaganda by Hizb ut-Tahrir and al-Qaida-linked groups having been reported since last August.
The United States has long backed democracy in Bangladesh. Since 2001 Washington has provided over $400 million to support election integrity, legislatures, judicial development, and anti-corruption efforts, addressing the same political dysfunction and institutional decay that presently faces the country. Additionally, between 2017 and 2024, the U.S. allocated $40 million to counter violent extremism and $80 million for security sector reform, alongside sanctions on the Rapid Action Battalion (RAB), which is accused of thousands of extrajudicial killings and disappearances. These moves demonstrated the U.S. commitment to supporting an effective but accountable security sector.
However, recent sharp U.S. aid cuts now jeopardize these hard-won gains. With contested reforms and democratic and security institutions still fragile, disengagement would risk renewed instability and vulnerability to extremist and authoritarian influences. Robust U.S. re-engagement is essential to bolster democratic resilience and maintain stability in South Asia and the Indo-Pacific.
The Costs of Economic Uncertainty
Bangladesh-U.S. economic relations have entered a turbulent phase. In 2025, U.S. tariffs on Bangladeshi imports rose from 15 percent to 37 percent before being reduced to 20 percent after negotiations. While Bangladesh agreed to purchase more U.S. wheat, cotton, gas, and aircraft, the episode exemplified Washington’s volatile trade posture toward strategic partners.
In 2024, Bangladesh exported $8.4 billion in goods to the United States, over 85 percent from its vital ready-made garments (RMG) sector. By early 2025, amid apparel shifts away from China, Bangladesh became the top U.S. apparel source. However, the sudden tariff hike led to order suspensions from major retailers like Walmart, caused port backlogs, and threatened factory shutdowns and layoffs in Bangladesh’s RMG sector, which employs over 4 million people, mostly women.
This uncertainty comes as Bangladesh emerges from years of economic mismanagement and corruption under Hasina that drained $17 billion from the economy. Despite recovery signs – $25.44 billion in reserves, record remittances, and 5.7 percent projected GDP growth by 2027 – U.S.-induced economic upheaval threatens reduced export revenues and investor confidence, in a country already navigating a tight monetary path, and preparing to graduate from Least Developed Country (LDC) status in 2026.
Simultaneously, critical U.S. humanitarian aid to Bangladesh has declined. Hosting over 1 million Rohingya refugees, Bangladesh has long relied on robust and bipartisan U.S. support, receiving over $2 billion in assistance since 2017, including $300 million in 2024, 54 percent of total worldwide aid.
But by mid-2025, even with a $73 million wavier for “lifesaving aid,” U.S. contributions plummeted to 25 percent of total disbursed global funding, despite $934 million in newly requested assistance in the United Nations’ Rohingya Joint Response Plan. This has triggered cuts to food rations as well as U.S.-funded clinics and schools; thereby worsening malnutrition, disease, and undereducation, and fueling vulnerability to radicalization and recruitment by militant groups.
The recent Congressional Rohingya Gap Act urges the administration to adhere to “minimum standards” for food aid to Bangladesh. Despite official reassurances that lives are not put at risk, recent crises like Afghanistan show the dangers of such aid shortfalls. Sustained U.S. support is vital to prevent worsening humanitarian conditions, risks of radicalization, and to uphold Rohingya repatriation efforts and regional stability.
Preventing China from Filling the Void
As U.S. engagement in Bangladesh has waned, China has rapidly expanded its influence. A March 2025 meeting between Yunus and China’s President Xi Jinping yielded $2 billion in economically-centered deals and extended duty-free market access through 2028. In June, China dispatched its largest-ever Bangladesh-bound business delegation to Dhaka in order deepen ties with the interim government and emerging political forces. Beijing also stepped in after U.S. aid cuts, supplying rice to Rohingya camps following a $37 million USAID program slash.
In the security realm, China has supplied over 70 percent of Bangladesh’s weapons since 2019, and in spite of a recent Chinese-made F-7 plane crash that killed over 30 in a Dhaka school, Bangladesh has expressed interest in acquiring Chinese-Pakistani JF-17 jets, used in Pakistan’s most recent conflict with India. The new Chinese-built BNS Pekua submarine base in Cox’s Bazar – capable of hosting six submarines and eight warships – further cements Beijing’s growing Indian Ocean presence, threatening U.S. and Indian regional security interests.
While Bangladesh may seem peripheral to U.S. foreign policy interests, ignoring it would be a strategic error. China is continuing to step in, while Washington’s credibility falters. While shrouded with optimism, the country’s transition from an autocratic regime to a revived democracy is fragile, threatened by division, economic strain, and adverse authoritarian interference. Decades of U.S. investment – in democracy support, trade, security, and humanitarian aid – are at risk of being undone. For the United States, this is more than a bilateral issue; Bangladesh’s future trajectory will impact broader extremist trends in the region, the degree of China’s regional influence, and the strategic future of South Asia and the Indo-Pacific.