Bangladesh, the world’s second-largest apparel exporter, may soon face heightened competition in its largest export destination, the European Union (EU), as major rivals including China, Vietnam, Cambodia, Pakistan and Sri Lanka steadily increase their focus on the 27-nation bloc.

While Bangladesh currently holds over 20 per cent of the EU’s apparel market, data trends paint a clear picture of an evolving and intensifying competitive landscape.

Analysts and exporters warned that recent changes in US trade policy, particularly the implementation of reciprocal tariffs, were pushing global apparel producers to reduce their dependence on the American market, redirecting their supply chains toward Europe, Japan, and Canada.

In 2012, 56 per cent of China’s total apparel exports were destined for the EU, a share that rose to 68 per cent by 2023.

Over the same period, China’s exports to the US fell from 44 per cent to 32 per cent.

Vietnam sent 32 per cent of its apparel exports to the EU in 2023, up from 26 per cent in 2012, while its US share declined slightly, from 74 per cent in 2012 to 68 per cent in 2023.

Cambodia’s shipments to the EU surged from 40 per cent in 2012 to 63 per cent in 2023, while its US-bound share fell sharply, from 60 per cent to 37 per cent over the same period.

Pakistan also strengthened its EU focus, increasing the share of apparel exports to the bloc from 52 per cent in 2012 to 71 per cent in 2023, while its exports to the US fell from 48 per cent to 29 per cent.

Sri Lanka saw a similar shift, with 46 per cent of its apparel going to the EU and 54 per cent to the US in 2012, shifting to 57 per cent and 43 per cent, respectively, in 2023.

India stands out as an exception: in 2023, 42 per cent of its garment exports were sent to the EU and 58 per cent to the US — only a slight change from 2012, when the figures were 48 per cent and 52 per cent, respectively, reflecting a continued preference for the US market.

For Bangladesh, the EU has become increasingly dominant, accounting for 79 per cent of total ready-made garment (RMG) exports in 2023, up from 72 per cent in 2012.

By contrast, the share of RMG exports heading to the US fell from 28 per cent in 2012 to just 21 per cent in 2023.

M A Razzaque, chairman of the Research and Policy Integration for Development (RAPID), said the greatest concern lies not in the US tariffs themselves but in the ripple effects across global markets.

‘Constrained by American tariffs, supplies may be diverted to other key destinations such as the EU, Japan, and Canada,’ he explained.

‘This diversion could intensify price competition, squeezing margins and undermining profitability in the EU, where Bangladesh is already a dominant player.’

Adding to these pressures is the possibility of competitive currency devaluations among export-reliant economies, Razzaque warned.

‘As countries seek to offset losses in price competitiveness, currency adjustments could further undermine Bangladesh, which is already grappling with foreign exchange shortages and inflationary pressures. These challenges risk deepening macroeconomic vulnerabilities and complicating efforts toward external and fiscal stabilisation.’

As the industry braces for intensified competition, the key challenge for Bangladesh will be to safeguard its competitiveness without triggering destructive price wars that could erode the sector’s hard-won gains, exporters said.

Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said that intensifying competition would not only come from foreign players but also from within.

‘Local exporters currently shipping to the US may increasingly shift to the EU, intensifying competition among Bangladeshi exporters themselves,’ he said, warning of potential ‘unhealthy price competition’ as domestic players scramble to hold on to market share.

‘The situation could become quite severe if other garment-producing nations follow the same path, generating ‘price pressure’ in a market where the overall demand remains unchanged,’ Fazlu added.

Abdullah Hil Rakib, managing director of Team Group and former vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), also expressed concern.

‘The business shifting from the USA will flow into the EU, slowing the growth of existing European orders. The US tariff hike is triggering this redirection, and the result will be enormous price pressure,’ Rakib said.

Mahmud Hasan Khan, managing director of Rising Group, warned of a likely sharp drop in demand from the US, with severe consequences for exporting nations.

‘The big question is whether local exporters will continue to secure the same volume of work orders they have been accustomed to,’ he said, underscoring that the stakes for Bangladesh’s apparel sector are high.