Bangladesh’s ready-made garment (RMG) industry is facing a major challenge. The United States is the single largest destination for Bangladeshi garment exports, while the European Union collectively accounts for the largest regional market, receiving around 50% of the country’s total garment exports.
Since the imposition of retaliatory tariffs, exports to the US have declined. India, one of Bangladesh’s main competitors in the garment sector, has signed a free trade agreement with the European Union. Currently, India pays a 12% tariff on garment exports to Europe, which will be reduced to zero once the agreement takes effect. Bangladesh is set to graduate from Least Developed Country (LDC) status in 2026, after which it will no longer enjoy duty-free access. Without a new agreement with the EU, Bangladeshi exports could face tariffs of around 12.5% from 2029 onwards, eroding the country’s long-standing competitive advantage in European markets.
