Bangladesh’s advantage after the US Tariff shift: What the RMG industry must do now

The recent imposition of a 20% tariff on Bangladeshi apparel by the United States has reshuffled the sourcing landscape, placing Bangladesh on a more level playing field with competitors like Vietnam and India—both of which already faced similar or higher tariff rates.

While this development poses a short-term challenge, it also presents an unexpected opportunity: to reposition Bangladesh not just as a low-cost sourcing hub, but as a resilient, value-driven supplier in a tightening global apparel economy. But this window of opportunity won't stay open for long.

The RMG sector must now make strategic choices across production models, product diversification, lead time reduction, financing, and policy to transform this inflection point into long-term competitiveness.

Shift from High-Volume to Mixed-Volume Manufacturing

Over the last decade, Bangladesh built its RMG dominance around high-volume, basic items—T-shirts, hoodies, woven bottoms. But American buying behavior has shifted. Retailers and D2C brands are no longer placing bulk orders alone. Instead, they now operate with more seasonal collections, quicker replenishment cycles, and lower order quantities for trend-based items.

Factories need to adjust their capacity planning accordingly. Maintaining high-capacity lines remains essential, but there must be room for smaller, faster production runs. Production and industrial engineering teams need to be agile enough to manage multiple style changes within short timeframes. This flexibility improves the ability to serve mid-sized US retailers and digitally native brands.

Offering pricing models based on varied minimum order quantities will also give Bangladesh an edge. Many buyers are willing to pay a premium for speed, flexibility, and responsiveness in a volatile retail market.

Compete in Categories That Vietnam and China Dominate

Vietnam's strength in the US market lies not just in faster lead times, but in its broader product range. Their factories lead in synthetic activewear, outerwear, padded jackets, intimates, and seamless garments. Bangladesh, by contrast, still relies heavily on cotton-based basics such as T-shirts and joggers.

Now that all three countries face similar tariff rates, Bangladesh has a chance to expand into these higher-value segments. This requires investment in capabilities like circular knitting for polyester-spandex blends, quilting, laser cutting, and seamless bonding. Even without large capital investments, factories can take the first step by building internal sample development teams that focus on synthetic styles suited to existing machinery.

Some factories are already experimenting with hybrid styles—like polyester-heavy joggers or lightweight jackets—that can be made with minimal changes. Developing in-house tech packs for leggings, quilted tops, or track jackets helps attract mid-tier US buyers who are increasingly open to factory-driven designs. These capabilities are also gaining traction in Canada and Europe, creating long-term export potential.

Localize Fabric Sourcing for Non-Cotton Segments

One of the main reasons Bangladesh loses orders to Vietnam is delays in fabric sourcing. Most local mills still specialize in cotton or cotton-poly blends. For synthetics like nylon, poly fleece, mesh, or tri-blends, Bangladesh depends heavily on imports from China, Korea, and Taiwan, which adds 15 to 25 days to production timelines.

To address this, fabric mill owners should be encouraged to invest in man-made fiber (MMF) knitting and dyeing capacity. Buyers and brands also need to support this shift by committing to longer-term sourcing agreements, not just short-term garment orders.

In the interim, factories can work with buyers on semi-conversion strategies. This includes upgrading cotton joggers to polyester-cotton blends or adding mesh, zippers, or bonded panels to enhance basic activewear. These improvements require only minor machinery upgrades but significantly raise the perceived product value.

Working with local mills that already produce synthetic fabrics for export can help bridge the gap. Forward contracts, even in small volumes, can reduce reliance on imports and build fabric libraries for quick sampling. In today's fast-paced market, even a seven-day lead time advantage can influence a buyer's decision.

Upgrade from Compliance to Transparency

Being compliant is no longer enough. Global buyers—especially in the US—are under growing pressure from shareholders and regulators to source from factories that demonstrate measurable progress in sustainability, energy efficiency, chemical use, and labor standards.

Bangladesh has already earned global recognition for its high number of LEED-certified green factories. But the broader industry must also modernize—not necessarily through expensive certifications, but through transparency and data-driven reporting.

Digital tracking of key ESG metrics such as water usage per kilo, electricity consumption per garment, and worker retention rates allows factories to demonstrate tangible progress. Summarizing this information in a one-page dashboard for buyers creates trust, even if the buyer hasn't requested it.

Every factory should have at least one trained compliance or CSR officer capable of independently completing tools like the Higg Index or SLCP reports, reducing dependency on consultants and strengthening internal accountability.

Take Advantage of Financing Support to Scale Responsibly

Many factories are currently hesitant to scale due to cash flow constraints, volatile yarn prices, and uncertainty about buyer reliability. However, this is precisely the moment when smart, selective expansion can create competitive advantage.

The Bangladesh Bank, with backing from development partners, offers refinancing schemes for export-oriented industries, particularly those investing in green technology or value-added production capacity. Factory owners should explore these opportunities through their relationship banks, particularly under the Export Development Fund or Green Transformation Fund.

To reduce financial pressure, factories can negotiate partial advance payments from new buyers. Many private US labels are willing to offer a 30% advance on first orders, provided factories can share production schedules and fabric booking details.

In cases where production capacity is limited, factories can partner with trusted suppliers nearby—splitting cutting, sewing, or packing responsibilities while sharing profits. What matters most is securing the buyer and delivering on time.

Conclusion

The 20% US tariff may feel like a setback, and in the short term, it is. But it is also a wake-up call. For too long, Bangladesh's RMG sector has relied on preferential trade access and low labor costs. Those advantages are fading fast.

To stay competitive, Bangladesh must now compete with quality, category depth, ethical practices, and speed. Buyers still want to work with Bangladesh, but only if we offer new value under the new terms.

This is not the time to retreat. It is time to evolve.

Syed Tanzim Mozaher is a second-generation RMG entrepreneur based in Chattogram. Contact: tanzim@independentbd.net

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.