Bangladesh election offers hope to garment sector battered by tariffs and unrest
Reuters :
Millions of Bangladeshi garment workers and their bosses will vote on Thursday 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 80per cent of exports and more than 10per cent of the economy, and supplies some of the world’s global brands.
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.
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 37per cent tariff on Bangladeshi imports in April 2025, reduced it to 35per cent in July negotiations and then to 20per cent from August 1 before agreeing to 19per cent on Monday under a new trade deal.
Bangladesh previously paid roughly 15per cent 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.