Around 400 Bangladeshi garment factories have closed over the past two years, pushing tens of thousands of garment workers onto the redundancy line, as a new 25.62% US import duty on Bangladeshi clothing compounds export losses to Europe and intensifies competitive pressure from Vietnam.

One recent casualty: Lithe Garments in Baniachala, north of Dhaka, where operator Mosammat Aklima, 27, was among 3,000 staff dismissed by text message.

"I'm three months pregnant. It's impossible for me to find another job... I don't know what lies ahead," Aklima said.

What is forcing the attrition?

The readymade garment sector employs more than 4.5 million people and contributes nearly 80% of Bangladesh's merchandise exports. BGMEA president Mahmudul Hasan Babu pegs the latest year-on-year export decline at 1.5%.

"They were unable to survive in a highly competitive market," Babu said. "Over the past 12 months, exports have fallen by nearly 1.5%."

Full-year 2025 deliveries hit roughly $39 billion, according to the trade body. Eurostat data show EU imports of Bangladeshi textiles dipped through the first five months of 2026. Shipments to the United States, which takes about 20% of sector exports, slipped at the start of 2026 before rebounding as China's share contracted.

Washington delivered the latest blow last week, applying new tariffs across roughly 60 countries and pushing the rate on Bangladeshi clothing to 25.62%.

Where does the cost gap leave sourcing?

The duty lands on top of a structural handicap. Bangladesh holds no free trade agreement with the European Union, a lever Vietnam and India have used to keep apparel flowing into the bloc duty-free. Lower labour costs, long the country's price anchor, no longer offset that asymmetry.

Mohiuddin Rubel, managing director of consultancy Apparel Voice, blames decades of under-investment in higher-value categories.

"We have grown without planning and without putting the necessary infrastructure in place," Rubel said. "We have focused our efforts on basic items (T-shirts, jeans, five-pocket trousers and classic shirts) rather than diversifying into items such as jackets, military uniforms or protective and medical clothing."

A World Bank study cited in industry briefings puts 80% of Bangladeshi readymade garment factories on labour-intensive production methods. The sector still imports most designs, fibres and some yarn, leaving limited domestic value-add to absorb margin pressure.

Can Bangladesh rebase into synthetics and technical apparel?

Advisers say the route back to growth runs through man-made fibres and product diversification.

"Developing the country's capabilities in the production of synthetic fibres and sportswear will be crucial to seizing future growth opportunities and increasing export revenues," according to a sewing-thread specialist in Dhaka, who requested anonymity.

Manufacturers also link order softness to the conflicts in Ukraine and the Middle East, stacking those losses onto an already fragile cost structure.

What is the sourcing takeaway?

The combined weight of the 25.62% US duty, the EU's bilateral-deal gap and volume losses in basic commodity apparel is forcing brand sourcing teams to reassess Bangladesh allocations. Volumes in T-shirts and denim are shifting to Vietnamese and Indian suppliers with preferential EU access, while surviving Bangladeshi capacity must pivot into synthetics, outerwear, technical uniforms and value-added services if the country's $39 billion apparel base is to hold.