Originally posted in Daily Observer on 3 April 2026
War shock and tariff squeeze push exports into sharp drop
Mounting geopolitical tensions in the Middle East, coupled with deepening global economic uncertainty, have pushed Bangladesh’s export sector onto a worrying downward trajectory, dealing a fresh blow to the country’s ready-made garment (RMG) industry-the backbone of its economy.
Latest data from the Export Promotion Bureau (EPB) reveal that merchandise exports fell by a steep 19.78 per cent year-on-year in March, reflecting both external shocks and domestic constraints. Industry insiders say the downturn was partly exacerbated by reduced factory operations during the Eid-ul-Fitr holidays, which resulted in 8 to 10 fewer working days.
However, the impact of the ongoing Middle East conflict has proved far more severe. Disruptions to logistics and heightened uncertainty have significantly reduced the volume of goods transported from factories to ports, slowing shipment flows and delaying deliveries.
The situation has been further compounded by the United States’ counter-tariff measures introduced last year. These have led to a marked decline in purchase orders from one of Bangladesh’s largest export markets. At the same time, demand from Europe has softened, as Chinese exporters-facing higher tariffs in the US-have redirected goods to European markets at more competitive prices.
Taken together, these pressures have triggered a broad contraction in export orders.
In March, Bangladesh exported approximately 420 million kilograms of goods, generating US$3.396 billion in revenue-down sharply from US$4.233 billion in the same month a year earlier.
Mohammad Masud Kabir, Managing Director of Motex Group, said many international buyers have either postponed or scaled back orders due to concerns over timely delivery following recent political developments.
“Some buyers are placing smaller orders than usual, while others are holding back altogether,” he noted.
He added that changes in global trade dynamics, particularly US tariff policies, have eroded demand across key markets. In the United States, higher import costs have squeezed consumer purchasing power, directly affecting demand for Bangladeshi garments.
“Bangladesh largely produces basic apparel, where consumers are highly price-sensitive,” Kabir explained. “With duties now reaching around 36 per cent under the new tariff regime, the additional cost burden has become difficult for consumers to absorb.”
He also pointed to a shift in consumer behaviour, with many buyers now favouring more durable clothing over low-cost, short-term fashion-further undermining demand for Bangladesh’s core product lines.
Export data compiled by the National Board of Revenue (NBR) indicate that shipments are recorded only after customs clearance, encompassing direct exports, local supply to export-oriented firms, and sample consignments.
EPB figures show that export performance has been weakening steadily since the start of the current 2025-26 fiscal year. After posting a robust 25 per cent growth in July, exports have declined month-on-month. In February, export earnings stood at US$3.5 billion-down 0.5 per cent year-on-year.
The RMG sector, which accounts for more than 80 per cent of Bangladesh’s total exports, has been particularly hard hit, recording seven consecutive months of decline from August to February.
Economists and exporters attribute the slump primarily to weakening global demand, driven by persistently high inflation in major export destinations. This slowdown has directly curtailed order volumes for Bangladeshi manufacturers.
At home, structural challenges have compounded the crisis. Political uncertainty, inconsistent policy signals, infrastructure bottlenecks, and chronic shortages of gas and electricity have all constrained industrial output, preventing factories from operating at full capacity.
Dr Khondaker Golam Moazzem, Research Director at the Centre for Policy Dialogue (CPD), said the export downturn reflects a combination of global and domestic pressures. “Sluggish demand in key markets, rising international competition, and the strong positioning of countries like China and Vietnam have all contributed to the decline,” he observed.
“Order relocation from China and the diversification of Vietnamese exports are emerging as significant challenges for Bangladesh,” he added.
Moazzem also highlighted domestic impediments, including unreliable energy supply, land scarcity, infrastructure deficits, and a complex investment climate, all of which have hindered the sector’s ability to attract new orders and fully utilise technological capacity.
Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association, echoed similar concerns. “Export orders have declined due to weakening global demand and ongoing trade tensions linked to US tariffs,” he said.
He warned that geopolitical risks remain elevated. “The Russia-Ukraine war continues, and new tensions between Iran and the United States have added further uncertainty. These developments could dampen global demand even more.”
Adding to the strain, shipping companies are now charging between US$3,000 and US$5,000 per container as risk premiums, significantly raising export costs. Industry players caution that such surcharges could render certain sectors, including processed food exports, commercially unviable.
“Unless geopolitical tensions ease, the situation is unlikely to improve,” Hatem remarked.
According to EPB data, Bangladesh exported goods worth US$31.91 billion during the first eight months (July-February) of the current fiscal year-down 3.15 per cent compared with the same period last year.
This marks a sharp reversal from the 10.63 per cent growth recorded during the corresponding period of the previous fiscal year, underscoring the mounting challenges facing the country’s export engine.
