Bangladesh garment industry faces crisis as US tariff threatens thousands of factories
Over 250 Bangladeshi garment factories face severe challenges if the United States proceeds with plans to impose an additional 35% tariff on imports from Bangladesh, effective 1st August. These factories are particularly vulnerable, with between 60% and 100% of their exports directed to the US market, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
In addition, approximately 1,000 other factories, with export shares ranging from 1% to 60% to the US, are also expected to feel the impact. BGMEA senior vice president Inamul Haq Khan Bablu highlighted that factories sending more than 60% of their exports to the US are most at risk. “Already, due to the previous 10% tariff increase, many factories have borne additional costs of 2% to 5%, leading to losses. An added 35% tariff would make it impossible for these exporters to sustain their US business long-term,” Bablu stated.
The US remains Bangladesh’s largest single export market, valued at nearly US $ 9 billion, with over US $ 7 billion from readymade garments. Mahmud Hasan Khan Babu, president of BGMEA, noted that around 2,500 garment factories are involved in exports, with 1,322 directly exporting to the US. Factories affiliated with the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) also export to the US, with estimates suggesting that over 300 factories, including some from both associations, could face significant losses due to high US market dependence.
Industry leaders expressed grave concerns over the potential impact. AK Azad, managing director of the prominent Me-Hem Group, which heavily relies on US buyers, revealed that a major US buyer recently inquired about the extent of tariff costs they might have to absorb. Azad, who exports US $ 80 million annually to this buyer, said, “If I have to pay 35% additional tariff, it could wipe out my profit. This is the worst crisis I have seen in my 40 years in the industry.”
Factory owners, such as one in Narayanganj’s Kanchpur, warned that absorbing such tariffs is unsustainable, with many contemplating shutdowns if the situation persists. “My US exports constitute 80%. Buyers are asking how much tariff I can absorb. If this continues, I might have to shut down,” the owner said anonymously.
Finding alternative markets quickly is deemed highly challenging. Babu emphasized that shifting such large volumes of exports to new markets cannot be achieved overnight, raising fears of factory closures if the tariffs remain in place. BGMEA data shows that 822 factories export up to 20% of their volume to the US, while others have higher exposure, with some nearly fully reliant on the US market.
Meanwhile, a Bangladeshi government delegation is scheduled to travel to the US for tariff negotiations. Notably, the team does not include private sector or industry representatives, raising concerns among exporters about their influence on the negotiations.
The looming tariff increase threatens to disrupt Bangladesh’s garment industry, with many stakeholders warning of potential factory closures and job losses if a resolution is not reached.
