A Call to Action for a Resilient Future

In a surprising turn of events, the United States has imposed a 35% tariff on imports of ready-made garments (RMG) from Bangladesh, a decision announced by President Donald Trump in a letter to Chief Adviser Muhammad Yunus on July 10, 2025. This move, following months of uncertainty and initial talks of a 37% tariff, poses a significant challenge to an industry that forms the backbone of Bangladesh’s economy. While negotiations are still underway, and the tariff may not be final, the potential impact is a wake-up call that demands immediate strategic shifts.

Compared to competitors like Vietnam (20% tariff), India (28% tariff under review), and Sri Lanka (30% tariff), Bangladesh faces a steeper hurdle. Even China, burdened with tariffs up to 145% on certain goods, benefits from temporary suspensions, highlighting the urgency for Bangladesh to adapt. Experts suggest that even an optimistic outcome may leave tariffs hovering between 25-30%, compelling the industry to rethink its global stance.

Navigating the Economic Ripple Effects

The immediate consequence of this tariff is a rise in retail costs for American consumers, likely dampening demand and shifting orders to nations with lower tariffs. This shift is already evident: a US buyer recently abandoned a production move from China to Bangladesh due to unresolved tariff issues, while another medium-sized buyer relocated to Uzbekistan, lured by efficient lead times and advanced facilities. Such losses underscore the risk of declining export volumes, a critical concern for an economy where RMG constitutes over 80% of export earnings.

Yet, this challenge also opens doors. With the US market under strain, Bangladesh must pivot to alternative regions like the EU, UK, Canada, and Australia, where trade terms remain favorable. While China’s export value dwarfs Bangladesh’s at $266 billion versus $38 billion in 2020, the gap signals an opportunity for growth if strategic moves are made swiftly.

Innovating for a New Era

The days of relying solely on high-volume, low-margin orders are fading. Bangladesh’s garment sector must embrace innovation, focusing on speed, sustainability, and value-added products. Niche markets—sustainable outerwear, premium technical fabrics, and private-label collections for boutique retailers—offer a path forward. Online platforms like Zalando, Amazon, and ASOS, which are poised to dominate global retail, present a golden opportunity for small-batch, fashion-forward drops.

To succeed, the industry needs a mindset shift. Accepting smaller, high-value orders, as China does, and ensuring dyeing facilities operate at peak capacity can reduce delays. Establishing sales and design offices in key markets like the US and EU, staffed by loyal Bangladeshi professionals, will foster stronger buyer relationships. Additionally, supporting small and medium enterprises (SMEs) with government-backed financing and visa assistance for trade fairs can nurture micro-brands, proven to thrive with the right support.

Strengthening Global Ties

Government-to-government diplomacy is crucial. Engaging US retail allies and securing bipartisan consensus on prioritizing garments and textiles can stabilize relations. Avoiding political missteps and promoting ethical, reliable production will enhance Bangladesh’s global image. The government could also redirect a portion of the 12-15% advance income tax on buying houses to subsidize e-commerce memberships, boosting revenue and competitiveness.

A Defining Moment

Bangladesh’s second-generation industry leaders, equipped with global experience, are ready to lead this transformation. With government foresight, banking reforms, and improved infrastructure, the nation can not only safeguard its current standing but also ascend to new heights. The time to act is now—hesitation risks losing ground to competitors like India and Vietnam. By embracing change with urgency, Bangladesh can turn this tariff challenge into a springboard for a thriving, innovative future.

Written by an industry veteran with deep roots in Bangladesh’s garment sector.