Bangladesh election offers hope to garment sector battered by tariffs and unrest

DHAKA – Millions of Bangladeshi garment workers and their bosses will vote on Feb 12 for a new government, hoping it can save the country’s biggest industry, which has suffered six straight months of falling exports due to US tariffs and domestic political and labour unrest.

The garment sector, which supplies some of the world’s global brands, is Bangladesh’s economic lifeblood, driving 80 per cent of exports and more than 10 per cent of the economy.

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 Mr Mohiuddin Rubel, additional managing director of Denim Expert, which supplies brands such as 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.

“We cannot depend on one industry forever,” Jamaat-e-Islami said on social media. “Our manifesto expands exports beyond garments into leather, jute, pharmaceuticals and agro-processing.”

Trump tariffs ‘big disaster’

Factory owners say exports have slowed because of US tariffs and political instability following the 2024 ouster of long-time leader Sheikh Hasina.

US President Donald Trump first imposed a 37 per cent tariff on Bangladeshi imports in April 2025, reduced it to 35 per cent in July negotiations and then to 20 per cent from Aug 1, before agreeing to 19 per cent on Feb 9 under a new trade deal. Bangladesh previously paid roughly 15 per cent duty to access its largest market.

Under the deal, the US 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 the amount of US-made textile inputs, such as cotton and man-made fibres, that Bangladesh buys.

Bangladesh currently imports cotton mainly from Brazil, India, Africa and the US.

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,” Mr 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.”

Mr Ehsan, who owns three factories, said 2025 was the first time 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 added.

Instability worsening pain

Some factory owners said buyers were pulling orders due to reports of instability in the country, including mob attacks on media houses in December. An unelected interim government has governed Bangladesh since a deadly popular uprising forced Hasina to flee to New Delhi in August 2024.

Mr Md Shehab Udduza Chowdhury, vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said: “This unstable situation has meant that exports have dipped... it has never been so bad before.”

He added that the US deal “gives us a little relief; it is a little hope for us”.

Bangladesh also experienced major labour unrest in 2024 as workers and unions pushed for a 23,000-taka ($240) minimum monthly wage, up from the 8,300-taka rate set in 2019 by the Hasina government.

In response, the interim government increased the annual wage increment to 9 per cent from the earlier 5 per cent and shortened the next wage review cycle from five to three years.

Manufacturers say the changes have increased their financial strain and eaten into profits, even as international buyers pressure them to produce faster and cheaper.

Garment bosses said the US deal was badly needed, and a democratically elected government offered hope.

“The 0 per cent reciprocal tariff offer, along with the fact that we will soon have an elected government, means that things could improve for the ready-made garments industry,” said Mr Faisal Samad, a BGMEA director and managing director of Surma Garments, which sells to Reebok, Primark and others. REUTERS