RMG net exports fall 15% in Apr-Jun over US tariff concerns, NBR strike

Highlights

• Reasons behind the weak quarterly export performance:
• US tariff announcement in April shook buyer confidence, order delays
• India's restrictions on Bangladeshi RMG imports via land ports
• NBR strike disrupted customs operations and export processing.
• Slowing global demand amid economic uncertainties

Bangladesh's readymade garment (RMG) sector saw a 15% drop in net exports in the April–June quarter of FY25, driven by the US tariff announcement in April, disruptions from the NBR strike, India's curbs on land-port RMG imports, and slowing global demand.

Exporters say the US tariff issue initially caused heightened uncertainty among buyers and order deferrals. However, the sector is now optimistic as the reciprocal tariff on Bangladeshi goods was lowered from 37% to 20%, while a higher 50% tariff was imposed on Indian goods.

According to a Bangladesh Bank report, the country's RMG net exports — calculated by subtracting the value of imported raw materials from export earnings — fell to $5.17 billion (56.78% of gross RMG exports) in the Apr–Jun quarter, from $6.09 billion (58.90%) in the Jan–Mar quarter of FY25.

Total RMG export earnings stood at $9.12 billion in April–June, reflecting an 11.92% decline from $10.35 billion in the previous quarter. Despite this quarter-on-quarter fall, earnings were still 3.15% higher than the same period a year ago.

Bangladesh's key RMG markets during the quarter included the United States, Germany, the United Kingdom, Spain, France, the Netherlands, Italy, Canada, and Belgium. Exports to these nine countries generated $6.55 billion, accounting for 71.89% of total RMG earnings.

According to the report, during the Apr-Jun quarter, the broader global economic headwinds, combined with domestic ongoing issues related to rising production costs, limited diversification of export markets, contributed to a volatile export trend.

RMG leaders hopeful as India faces higher US tariffs

On Wednesday, the US imposed a 50% reciprocal tariff on Indian goods. Tariffs on Chinese products are also higher and could be hiked further, as indicated by Trump on Wednesday. These developments could shift sourcing patterns globally, say exporters.

"Apparel buyers may now look to Bangladesh and Vietnam to avoid the high costs of sourcing from India and China," said Mahmud Hasan Khan Babu, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). "We must be ready to capture this shift."

Currently, China is the largest exporter of garments to the US, followed by Bangladesh, Vietnam, and India. However, with US buyers now facing 50% tariffs on Indian goods and steep duties on Chinese products, switching to Bangladeshi suppliers could reduce costs by nearly 30%, exporters estimate.

While the tariff realignments present a strong opportunity for Bangladesh, exporters say several domestic constraints, such as the gas crisis, must be urgently addressed to take full advantage.

Exporters also called for political stability, smoother port operations, banking sector reforms, and a more investment-friendly climate.

Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), echoed Babu.