How escalating US-EU trade war sparks fears for Bangladesh RMG exports
Data show that Bangladesh's overall exports, including readymade garments, have been declining for five consecutive months, while prices in the European market have also softened during the period.
The growing threat of a renewed trade war between the United States and the European Union is stoking fears among Bangladeshi garment exporters that retaliatory tariffs could trigger global supply chain volatility and suppress consumer demand in their most vital markets.
Industry insiders say any escalation of tariff measures between the two economic blocs could trigger fresh inflation in the US and Europe, reducing consumer spending and, in turn, demand for Bangladeshi apparel. Such a scenario could further strain exports.
Data show that Bangladesh's overall exports, including readymade garments, have been declining for five consecutive months, while prices in the European market have also softened during the period.
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Representatives of foreign buyers sourcing from Bangladesh, however, believe the immediate impact of any new tariff measures would be limited, although prolonged trade tensions could create uncertainty over the longer term.
According to a report by The Guardian, the EU's top diplomats met for crisis talks on Sunday (18 January) and discussed reviving a plan to levy tariffs on €93 billion ($108 billion) of US goods, which was suspended after last year's trade deal with Trump.
In a post on Saturday on Truth Social, US President Donald Trump said he would impose a 10% tariff on Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland beginning 1 February.
Media reports also said Trump threatens a 25% tariff on European allies until Denmark sells Greenland to the US.
Experts warn that such tariff disputes could destabilise not only transatlantic trade but the wider global trading system.
MA Rahim Feroz, vice-chairman of DBL Group – one of Bangladesh's largest apparel exporters with annual turnover exceeding $1 billion – told TBS that higher tariffs in Europe or the US would inevitably lead to inflation.
"If inflation rises, consumers will buy less, which will put significant pressure on us and negatively affect Bangladesh's exports to those markets," he said.
Echoing Feroz, Md Shehab Udduza Chowdhury, vice president of the Bangladesh Garment Manufacturers and Exporters Association, warned that imports could be affected if trade tensions intensify.
In 2025, Bangladesh exported garments worth $38.82 billion globally, with nearly 80% destined for the European Union, the US and the UK.
Exporters say Bangladesh has already felt the impact of reciprocal tariffs imposed by the Trump administration, with shipments to both the US and Europe coming under strain. They add that garment prices in the European market have declined as a result.
Feroz noted that after the US imposed higher tariffs on China and India than on Bangladesh, the two larger exporters stepped up efforts to sell more in Europe, intensifying competition and forcing Bangladeshi exporters to offer price discounts.
An analysis of Eurostat data by the Bangladesh Apparel Exchange shows that the average price of Bangladeshi apparel exported to Europe fell by 2.06% between January and September 2025. Prices of apparel from other major exporting countries also declined during the same period.
Trade experts see little upside for Bangladesh if a trade war erupts between Europe and the US.
Mostafa Abid Khan, an international trade expert and former member of the Bangladesh Trade and Tariff Commission, said he does not foresee any major short-term disruption to Bangladesh's exports or imports.
Before the latest tariff announcements, US tariffs on EU goods ranged from zero to 15%, while UK exports to the US faced a 10% tariff. US goods entering the UK are subject to a 6% tariff, and EU data show that a significant number of US products have enjoyed duty-free access to the EU since August.
Buyers remain unconcerned
Despite exporters' worries, foreign buyers say their sourcing from Bangladesh remains unaffected.
A senior official at the Dhaka office of a Sweden-based brand, speaking on condition of anonymity, said potential EU-US tariffs are unlikely to hurt Bangladeshi exports.
"We source around $250 million worth of products from Bangladesh each year, and our order flow remains normal – if anything, it may increase in the future," he said.
Similarly, the country manager of a Germany-based sportswear brand said the tariffs under discussion are selective and unlikely to affect Bangladesh directly. "However, it is still too early to say what the long-term consequences might be if such a situation persists."
