Tariffs, energy crisis behind export slide - BGMEA says

Volatile global situation, US reciprocal tariffs, high bank interest rates, poor port operations, and LDC graduation-related issues have caused the decline in garment exports over the past year, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said on Monday.

“Both domestic and international factors are responsible for the slowdown,” said BGMEA President Mahmud Hasan Khan after an emergency board meeting on the export slowdown held at the BGMEA office in Dhaka.

In the July-May period of the 2025-26 fiscal year, garment exports totalled $35.31 billion, posting a 3.41 percent year-on-year decline, according to the Export Promotion Bureau.

Khan said weakening global demand had prompted Western retailers and brands to hold back orders, as unsold inventory had piled up on their shelves.

Uncertainty over US President Donald Trump’s reciprocal tariffs -- which have been revised several times -- compounded buyers’ hesitation.

The US-Israel war involving Iran disrupted shipment routes, raised airfreight costs, extended lead times, and reduced buyer visits to Bangladesh, Khan said.

Small and medium enterprises were hit hardest, as brands grew cautious about placing orders.

On the domestic front, high bank interest rates have eroded slim profit margins, discouraging entrepreneurs from expanding operations. An energy crisis has also forced factories to run at 60 percent to 70 percent capacity.

Bangladesh’s impending graduation from least developed country (LDC) status has added further uncertainty, as buyers remain unsure whether the government’s application for a three-year deferment will be granted.

Studies suggest Bangladesh could lose $17.5 billion in annual exports following the graduation. The country also lacks Generalised Scheme of Preferences (GSP) Plus access to the European Union, where 49.15 percent of its apparel is destined.

Khan said he plans to prepare a policy paper and consult stakeholders, trade analysts, and economists before engaging the government on remedial measures.