Apparel Export Faces New Challenge

Bangladeshi apparel export loses market share, Weakness exposed that labor query just lays bare.

Data divulged by WTO revealed that Bangladesh gains little in RMG export from the tariff debate. Bangladesh registered a growth of only 0.89% in apparel export in 2025. Vietnam registered 10.53% growth. While Cambodia posted a growth of 16.88%, Pakistan, Indonesia and India recorded growth of 6.83%, 5.79% and 5.47% respectively (see "Bangladesh posts 0.89% apparel export growth in 2025, lowest among Asian rivals: WTO", The Business Standard,July 13,2026,https://www.tbsnews.net/economy/rmg/bangladesh-posts-089-apparel-export-growth-2025-lowest-among-asian-rivals-wto-1487416).

China's market share of global apparel exports fell from 31.71% to 27.35% since 2021. The country is subject of severe tariff from the Trump administration. Bangladesh's total RMG export stood at $38.82 billion in 2025. Despite the fact that Bangladesh retains 2nd position in the US market, Bangladesh ceded market share to rivals like Vietnam and Cambodia. This is an worrying development.

Recently, USTR opens an investigation on 60 economies in the issue of forced labor. Traces of forced labor could land Bangladesh facing tariff up to 12.5% (see "US announces new tariffs over forced labour concerns",Mitchell Labiak,BBC News,3 June 2026,https://www.bbc.com/news/articles/cq6pe7nvldmo). Bangladesh is still reeling from the reciprocal tariff (19% for Bangladesh) while the forced labor related punitive tariff has the potential to augment the tariff burden.

If this punitive tariff really comes into effect, Bangladesh's apparel market share may further shrink. In addition, erosion of export earning resulting from the punitive tariff may worsen the current account balance. Any export loss amid austerity measures will pose severe challenges to macroeconomy including pressure on the exchange rate of Taka.

One of the domestic way to confront this challenge is to depreciate the currency. But look at the sheer size of the tariff, 12.5%. Depreciation of this magnitude will not pose serious problem to the economy but could aggravate the inflationary pressure by increasing the prices of imported goods, which is not a priority for the govt. So depreciation of Taka by 12.5% is not compatible with the economic priorities of the govt. However, a 2% or 3% depreciation will not bring that much pressure.

Forced labor related tariff already casts shadow over govt's employment creation goals. Govt envisages to create 2.5 million jobs through the central bank led stimulus package. At the heart of this stimulus is reopening of closes garment factories. Many of which are small in size and survive on subcontracting. Further labor related compliance will strain the production cost of the factories and many simply cannot comply with the new standards. Moreover, punitive tariff may shrink work order and thereby shrink future subcontracting opportunities for these factories.

While Bangladesh is still coping with the ensuing situation from reciprocal tariff, forced labor related investigation puts its apparel export share into precarious situation. This new challenge even threatens govt's job creation goal. Depreciation of Taka, to some extent, may mitigate the adverse effects.