Bangladesh’s ready-made garment (RMG) sector is facing renewed pressure in the European Union (EU), its largest export destination, as exports dipped in May and global supply chain shifts signal growing competition, particularly from China, which is recalibrating its trade focus away from the United States amid high tariffs.

According to Eurostat data, Bangladesh’s apparel exports to the EU decreased by 10.5 per cent year-over-year in May 2025, falling to €1.43 billion from €1.59 billion in May 2024.

The drop marked the first monthly contraction this year, following a strong start in January that saw exports rise by more than 60 per cent. The initial surge, analysts suggest, was likely driven by post-pandemic inventory replenishment or temporary spikes in demand.

Despite a 17.8 per cent growth in EU-bound exports over the January–May period—reaching €8.97 billion—concerns are mounting about sustainability. The decline in May is seen as an early warning of intensifying competition from regional and global players.

China, facing punitive US tariffs and a proposed 35 per cent tariff on Bangladeshi goods, has begun shifting its export emphasis towards Europe. A QIMA report indicates that demand for Chinese product inspections by European brands rose by over 5 per cent in Q2 2025, while inspections by US buyers declined by 24 per cent.

Notably, inspection demand rose in key EU markets: the Netherlands (27%), Austria (21%), Spain (6%), Poland (5%), and Germany (4%).

China’s apparel exports to the EU reached €9.04 billion in the first five months of 2025, up 17.1 per cent from a year earlier. The EU’s total apparel imports rose to €36.82 billion, with other major exporters also gaining ground: Vietnam (15.7% growth to €1.69 billion), Pakistan (20% to €1.63 billion), Cambodia (30.3% to €1.77 billion), and India (19.1% to €2.38 billion).

The looming implementation of a steep US tariff on Bangladeshi goods is prompting local exporters to shift their focus to the EU, further crowding the market.

Former BKMEA president Fazlul Hoque said the redirection of Chinese exports to the EU will likely intensify competition and suppress prices. He also pointed to broader structural challenges in Bangladesh, including rising utility costs, energy prices, and minimum wage hikes, which erode competitiveness.

Exporters also fear losing ground if countries like India secure more favourable US trade terms. “Some exporters are now taking orders at below production cost to maintain operations and pay wages,” Hoque said.

According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data, total garment exports to the EU reached 1.23 billion kilograms in 2024—a 10.18 per cent increase from 2023. However, the average price per kilogram fell by 4.84 per cent to $16.07, indicating continued downward pressure on margins.