by Toufiq Jayad, Dhaka, November 19, 2025.

The United States continues to be the largest export destination for Bangladesh’s ready-made garment (RMG) products, but the recently increased tariff measures have created significant pressure on the sector. Until recently, Bangladeshi apparel entering the US market faced an average tariff of around 16.5 percent. With the latest adjustment adding another 20 percent, the overall effective duty has now risen to 36.5 percent. Industry observers say that if buyers shift this additional burden onto manufacturers, local producers may be forced to accelerate automation, raising concerns about potential job losses among low-skilled workers. Export prices have already fallen as a result of the rising tariff load, further reducing overall export earnings.

The US market traditionally applied a duty of 15.5 to 16.5 percent on cotton-based garments, while synthetic or MMF-based garments faced 21 to 24 percent. Bangladesh exports predominantly cotton apparel, though a notable share of synthetic garments is produced in EPZ-based factories. Under the tariff measures introduced during the Trump administration, duties had been temporarily raised by 37 percent with a 90-day suspension period, during which importers paid an additional 10 percent that was partially passed on to Bangladeshi exporters. Under the most recent announcement from US authorities, importers must now pay an additional 20 percent, and exporters are expected to bear part of that burden as well.

A joint study titled “2025 Fashion Industry Benchmarking Study,” carried out by the University of Delaware’s Department of Fashion & Apparel Studies together with the United States Fashion Industry Association (USFIA), reveals growing uncertainty among brands. The report, based on interviews with executives from leading US fashion companies, shows that more than 70 percent of respondents say increasing tariffs have had a major impact on their business. Rising sourcing costs and shrinking profit margins have discouraged imports, while consumers face higher retail prices. Nearly half of the companies surveyed said their sales have already declined, and many have either laid off employees or postponed and cancelled orders. Industry insiders in Bangladesh fear that if the situation persists, the country’s US-bound export earnings could fall by two to three billion dollars within a year.

RMG exporters say that the new tariff structure has eroded Bangladesh’s price competitiveness at a time when US inflation is already restricting consumer spending. Buyers are reportedly asking for additional price cuts to offset rising import duties. Economists estimate that Bangladesh’s export earnings would have been 20 to 25 percent higher if the country enjoyed duty-free access. In the absence of such benefits, buyers are increasingly shifting orders to countries with more favorable tariff regimes. As a result, orders for basic garment items have already slowed.

BGMEA president Mahmud Hasan Khan notes that the effective tariff on Bangladeshi apparel in the US market has now climbed to 36.5 percent. He warns that such a steep increase at a time of intense global competition may cause Bangladesh to lose orders to other sourcing destinations. Although the US government recently brought the countervailing duty down from 35 to 20 percent, this came with a condition: if at least 20 percent of the raw materials used in production are sourced from the US—particularly cotton—no additional duty will be charged. Bangladesh produces mostly cotton garments, but the bulk of imported cotton does not originate from the United States. Industry leaders say urgent measures are needed to take advantage of this exemption pathway. Khan also explained that Bangladesh still retains some price advantage, as China and India face tariffs of 30 and 25 percent respectively, though the margin is narrowing rapidly.

BKMEA president Mohammad Hatem says that despite improvements in knitwear capacity, manufacturers are not receiving fair prices, largely because buyers use the evolving tariff environment as a bargaining tool. The result, he says, is increasing pressure on factories struggling with production costs, compliance requirements and shrinking profit margins.

Economists share similar concerns. Dr Selim Raihan, Professor of Economics at Dhaka University and Executive Director of SANEM, says that US tariff policy has been a long-standing challenge for Bangladesh, and that the situation may worsen once Bangladesh completes its graduation from LDC status. Without strong economic diplomacy and new trade preference agreements, Bangladesh risks losing significant market share to competitors like Vietnam. A research paper by the Center for Enterprise and Society (CES) at ULAB warns that continued tariff pressure could lead to a 15 to 20 percent decline in export orders, jeopardizing the livelihoods of millions of workers. Officials at the Ministry of Commerce say they are working with the USTR through the TICFA platform to seek tariff relief, particularly for cotton-based garments.

Despite steady growth in export earnings—from 25 billion dollars in 2014–15 to 39 billion dollars in 2024–25—industry analysts point out that worker productivity has not grown proportionately. Bangladesh lags behind countries such as Vietnam, China and Turkey in productivity metrics. The growth that has occurred has largely come from technological upgrading and improved management systems rather than significant gains in labor efficiency.

Bangladesh’s exports to the US reached a record 9.7 billion dollars in 2022, but the following two years saw a downturn due to tariff hikes and subdued global demand. Major exporters say the higher tariffs have made Bangladeshi products 30 to 35 percent more expensive for US buyers. Many brands are delaying decisions, renegotiating prices or spreading orders across multiple countries. Large export groups—including Ha-Meem, DBL and Pacific Jeans—are adopting new strategies, increasing automation, investing in MMF-based high-value apparel and upgrading technology to stay competitive. Smaller factories, however, face severe challenges as rising costs, low prices, compliance pressures and delayed payments squeeze their operations. Some have already reduced production or turned to subcontracting to survive.

Experts warn that without meaningful tariff relief and preferential access after 2026, Bangladesh’s RMG exports to the US could fall by six to eight percent, posing a serious threat to overall export stability. They emphasize that Bangladesh must diversify into higher-value products, strengthen its trade negotiations, modernize technology and secure tariff benefits for cotton-based garments to maintain its foothold in the US market. Without coordinated action from the government, industry associations and global buyers, the sector could face prolonged disruptions and a challenging period ahead.