RMG exports to US: China rapidly losing market share, Bangladesh unable to capitalise

China lost nearly $2 billion worth of readymade garment exports to the United States in the first six months of this year (January–June) compared with the same period last year.

However, Bangladesh failed to capture a significant portion of that lost market. Instead, competitors such as Vietnam, Cambodia and Indonesia increased their exports and took advantage of the opportunity.

According to data from the US Office of Textiles and Apparel (OTEXA), the United States imported readymade garments (RMG) worth $35.09 billion during the first half of the year, down 8 per cent from the same period last year.

Although overall US garment imports declined, Bangladesh's exports fell by a comparatively smaller 5.75 per cent. Imports from China, India, Mexico, Pakistan and Honduras also declined during the same period. In contrast, imports from Vietnam, Indonesia and Cambodia increased.

Local entrepreneurs in Bangladesh's garment industry say demand for apparel in the US has been slowing since reciprocal tariffs came into effect last year.

According to them, while purchase orders have been shifting rapidly away from China, a large share has gone to Vietnam, with Indonesia and Cambodia also benefiting.

They said Bangladesh has received comparatively fewer orders because much of the business moving out of China consists of man-made fibre garments, an area where Bangladesh's capacity remains relatively limited. In addition, Bangladesh continues to lag behind in fast-fashion orders due to its longer lead times.

The United States is the single largest export market for Bangladeshi readymade garments. In February this year, Bangladesh overtook China to become the second-largest apparel exporter to the US market. Although it retained that position at the end of June, exports during the January–June period fell by 5.75 per cent.

Bangladesh exported RMG worth $4.01 billion to the United States during the six-month period.

Fazlee Shamim Ehsan, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told Prothom Alo that Bangladesh's capability in non-cotton garments remains relatively weak. As a result, the country is not buyers' first choice for such products.

He also said Vietnam and Indonesia are able to deliver products with lead times of around one month. Bangladesh's exports have declined mainly because of weaker sourcing and logistics, he added.

Last year, however, Bangladesh's readymade garment exports to the US market grew by nearly 10.5 per cent to reach $8.2 billion.

The US-China trade war began before the Covid-19 pandemic. Since then, China's garment exports to the US market have been declining. The decline accelerated further after the United States imposed retaliatory tariffs last year.

During the first half of this year, China exported RMG worth $3.57 billion to the United States, a decline of 37.69 per cent compared with the same period last year. In the first half of last year, China exported garments worth $5.73 billion. That means China's exports declined by $2.16 billion in just one year.

Most of China's lost market has been captured by Vietnam, Indonesia and Cambodia. During the first half of this year, Vietnam exported RMG worth $7.85 billion to the United States, posting growth of 1 per cent. Indonesia exported $2.33 billion worth of garments and Cambodia exported $2.13 billion. Their export growth rates were 3 per cent and 12 per cent respectively.

The reciprocal tariffs imposed by US President Donald Trump were declared illegal by the US Supreme Court in February this year. Following that ruling, Trump announced a new 10 per cent tariff on products from all countries under the Trade Act of 1974. The law allows such tariffs to remain in effect for 150 days, and that period expired last month.

Last month, the Trump administration imposed additional tariffs of 10 per cent and 12.5 per cent on products from 60 countries, including Bangladesh, alleging they had failed to adequately enforce restrictions on goods produced through forced labour.

A 10 per cent tariff has been imposed on products from Bangladesh, Cambodia, Honduras, Indonesia, Mexico, Pakistan and Sri Lanka, while products from Vietnam, Turkey and China face a 12.5 per cent tariff. As a result, Bangladesh now enjoys a lower tariff rate than several competing countries.

Shovon Islam, managing director of Sparrow Group of Industries, told Prothom Alo, "We now have a 2.5 percentage-point tariff advantage. So although we performed poorly in the first half of the year, there is a good possibility of doing better in the coming months. We have already received two major purchase orders from US buyers. Both orders are shifting to Bangladesh from Vietnam. Many other manufacturers like us may also receive similar orders."

However, Shovon Islam expressed concern over the energy crisis.

"If the energy crisis remains at a tolerable level, it will not create major problems. But production has already started to be disrupted, and foreign buyers have also expressed concern over the situation," he said.