Most of Bangladesh’s export earnings come from the ready-made garment (RMG) sector. However, the country has yet to successfully diversify its export products. That said, with its current capacity, Bangladesh still has room to increase its exports. Competing countries are exporting goods worth billions of dollars. According to a recent report by the Asian Development Bank (ADB), Bangladesh’s garment exports could surpass $50 billion by 2026. But experts believe this target will be difficult to achieve due to rising global tariffs, especially those imposed by the United States.
ADB recently published a report titled “Roadmap for Investment Policy Reforms and Sustainable Development in Bangladesh.” Based on data from the International Finance Corporation (IFC), a World Bank Group institution, the report estimates that garment exports may reach $51 billion by 2026.
During the deposed Awami League government’s tenure, economic growth was often portrayed as stronger than it truly was by relying on exaggerated figures. Overstated export earnings created major trade credit deficits in the balance of payments (BOP) every year. The AL government had attributed the gap to delayed repatriation of export proceeds. However, under pressure from the International Monetary Fund (IMF), export data was later revised—and it showed that RMG exports had actually dropped by $2 billion in FY2023–24. According to the revised figures, Bangladesh’s garment exports stood at $36 billion in that fiscal year, compared to $38 billion the year before.
According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh exported $27 billion worth of garments in 2020. Exports rose to $36 billion in 2021, then to $46 billion in 2022. But exports declined again over the next two years.
On April 2, President Donald Trump announced a new reciprocal tariff policy at a White House press conference. The new rule imposes tariffs on nearly all countries, including an additional 37 percent tariff on Bangladeshi products. With the existing 15 percent tariff, the effective rate stands at 52 percent. Later, however, President Trump announced a 90-days suspension on the new tariffs. Still, the global tariff hike is expected to have a negative impact on the world economy. There are growing concerns over Bangladesh’s exports to its single largest market, the United States. Under these conditions, economists believe it will be quite challenging for Bangladesh’s garment exports to surpass $50 billion next year.
Dr. Fahmida Khatun, Executive Director of the Centre for Policy Dialogue (CPD), told Bonik Barta, “The pre and post-tariff situation is entirely different. I don’t know whether ADB’s projection considered the current reality. But if the new tariff stays in place, it will be very difficult to exceed $50 billion in export earnings. It’ll be hard to maintain growth and profits while managing higher costs. Since the U.S. has imposed tariffs worldwide, economies across the globe will weaken. Growth will decline, and so will demand and purchasing power. It’s not easy to find alternative markets quickly either. And demand will remain low in those markets too because of the tariffs. So, until the global economy recovers, finding new buyers will be tough. If it weren’t for the tariff, hitting the $50 billion mark wouldn’t have been so difficult.”
The United States is the biggest single-country destination for Bangladeshi exports. The two countries trade goods worth $10.5 billion. Of that, Bangladesh imports just over $2 billion worth of goods from the United States. On the other hand, exports from Bangladesh to the U.S. are slightly above $8 billion, about 87 percent of which comes from RMG. Consequently, it is no surprise that President Trump’s new tariff decision has hit Bangladesh’s garment sector the hardest. Naturally, garment exporters are the most concerned.
Right after President Trump made the announcement, U.S. buyers started reaching out to Bangladeshi garment factory owners. Exporters also began contacting their American clients to discuss the possible impact of the new tariffs. In some cases, the buyers themselves initiated the conversation.
According to industry sources, some U.S. buyers have already started assessing how the new tariff structure might affect business. Based on those assessments, they have begun giving fresh instructions to Bangladeshi factory owners. A few buyers are even asking exporters to absorb the added tariff cost themselves. In some instances, buyers have canceled new orders or asked factories to pause ongoing production.
Syed M Tanvir, Managing Director of Pacific Jeans, told Bonik Barta, “Looking at the actual growth of the garment sector, I don’t think hitting $50 billion in exports is realistic right now. The U.S. tariff will definitely have an impact. And since this is a global move, the effects will be felt worldwide. We’ll have to wait and see how much Bangladesh is affected. Still, we expect to see normal growth in exports. Last year, garment exports grew by around 12 percent. This year, that growth could be somewhere between 12 to 15 percent.”
During the first nine months (July–March) of the current 2024–25 fiscal year, garment exports showed a steady upward trend. According to data from the Export Promotion Bureau (EPB), ready-made garment exports reached $34 billion in these nine months—up from $27 billion during the same period last year. That is almost an 11 percent increase. If this trend continues, industry insiders believe the sector could post strong growth by the end of the fiscal year.
Mahmud Hasan Khan Babu, former Vice President of BGMEA, told Bonik Barta, “We can cross the $50 billion mark in garment exports if the U.S. doesn’t impose any more tariffs and if the government doesn’t raise electricity and gas prices through 2026.”
Bangladesh ranks eighth globally in terms of population. However, its export earnings are still far behind most other countries. An analysis of data from the World Bank and other global organizations shows that among the world’s ten most populous countries, only three—including Bangladesh—earn less than $100 billion annually from exports. The other two are Pakistan and Nigeria. Even among Asia’s developing economies, Bangladesh still lags in export performance.
Last year, the government approved a new National Export Policy for the 2024–27 period. It projected that by the end of FY2026–27, Bangladesh’s total export earnings would reach $110 billion. While the country has made impressive progress in garment exports, total export performance still is not where it needs to be.
Experts say this is largely due to weak policy frameworks and the country’s failure to turn its large population into an efficient labor force. In their view, given the size of the economy and in comparison to other competing nations, Bangladesh’s exports should have already crossed $100 billion. But that has not happened. Apart from direct cash incentives, most of the government’s export-related policies are not very helpful. On the other hand, countries with smaller populations than Bangladesh have already pushed their exports well past the $100 billion mark.
Dr. Rubana Huq, former president of BGMEA, told Bonik Barta, “It’s hard to say whether we’ll reach $50 billion in exports. With this tariff war, the number of consumers in the U.S. will likely go down. Prices of garments will drop because of pressure from buyers and the need to keep our factories running. And competitor countries will take away a good chunk of our business. So, how Bangladesh performs going forward depends a lot on the current government’s diplomatic strategy. Put simply, we urgently need strong economic diplomacy.”