Bangladesh election offers hope to garment sector battered by tariffs and unrest
Politicians from both major parties, the Bangladesh Nationalist Party and Jamaat‑e‑Islami, have vowed to reduce the economy's heavy reliance on the sector.
Highlights:
- Election offers hope to suffering garment industry
- Garment sector battered by US tariffs, domestic unrest
- Manufacturers say new government must ensure stability
- New US trade deal has brought some relief, says industry
Millions of Bangladeshi garment workers and their bosses will vote on Thursday (12 February) for a new government hoping it can save the country's biggest industry, which has suffered six straight months of falling exports due to U.S. tariffs and domestic political and labour unrest.
The garment sector is Bangladesh's economic lifeblood, driving 80% of exports and more than 10% of the economy, and supplies some of the world's global brands.
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In a country of 175 million, nearly four million workers, mostly women, keep the garment industry running.
"The industry is in a critical condition, and if steps are not taken now, it can be worse," said Mohiuddin Rubel, additional managing director of Denim Expert Ltd, which supplies brands including H&M.
Factory owners are calling for long‑term policy stability, a sustainable wage mechanism, a recovery in the banking sector, and competitive energy costs.
Politicians from both major parties, the Bangladesh Nationalist Party and Jamaat‑e‑Islami, have vowed to reduce the economy's heavy reliance on the sector.
"We cannot depend on one industry forever," Jamaat said on social media. "Our manifesto expands exports beyond garments into leather, jute, pharmaceuticals and agro‑processing."
Trump Tariffs 'Big Disaster'
Factory owners say exports have slowed because of U.S. tariffs and political instability following the 2024 ouster of long‑time leader Sheikh Hasina.
U.S. President Donald Trump first imposed a 37% tariff on Bangladeshi imports in April 2025, reduced it to 35% in July negotiations and then to 20% from August 1 before agreeing to 19% on Monday under a new trade deal. Bangladesh previously paid roughly 15% duty to access its largest market.
Under the deal, the United States will set up a system allowing a certain volume of Bangladeshi textile and apparel exports to enter duty‑free. The size of the zero‑tariff quota will be linked to how much U.S.-made textile inputs such as cotton and man‑made fibres Bangladesh buys.
Bangladesh currently imports cotton mainly from Brazil, India, Africa and the United States.
Industry leaders say the deal offers some relief and potential opportunities, but its overall impact will depend on pricing, the quota formulae and how the supply chain adjusts.
"The tariff has been a big disaster," Fazlee Shamim Ehsan, vice president of the Bangladesh Knitwear Manufacturers and Exporters Association, told Reuters before the new deal was announced.
"There is no stability. Some months we get small orders, other months big orders, because the market is so unpredictable."
Ehsan, who owns three factories, said 2025 was the first year in his 20 years in business that he lost money - "equivalent to two to three years of profits".
"Even during the COVID-19 period, I paid full salaries to my workers and did not incur losses despite production stoppages," he said.
Instability Worsening Pain
Some factory owners said buyers were pulling orders due to reports of instability in the country, including mob attacks on media houses in December. An unelected interim government has governed Bangladesh since a deadly popular uprising forced Hasina to flee to New Delhi in August 2024.
"This unstable situation has meant that exports have dipped ... it has never been so bad before," said Md. Shehab Udduza Chowdhury, vice president of the Bangladesh Garment Manufacturers and Exporters Association.
He said the U.S. deal "gives us a little relief, it is a little hope for us".
Bangladesh also saw major labour unrest in 2024 as workers and unions pushed for a 23,000‑taka ($208) minimum monthly wage, up from the 8,300‑taka rate set in 2019 by the Hasina government.
In response, the interim government increased the annual wage increment to 9% from the earlier 5% and shortened the next wage review cycle from five to three years.
Manufacturers say the changes have increased their financial strain and eaten into profits, even as international buyers pressure them to produce faster and cheaper.
Garment bosses said the U.S. deal was badly needed and a democratically-elected government offered hope.
"The 0% reciprocal tariff offer, along with the fact that we will soon have an elected government, means that things could improve for the ready-made garments industry," said Faisal Samad, a BGMEA director and managing director of Surma Garments Ltd that sells to Reebok, Primark and others.
