Millions of jobs may face wipeout

Bangladesh's export-led economy faces a potential employment crisis as the US prepares to impose a 35-percent countervailing tariff on imports from the country on August 1.

Industry leaders warn that the impact will be widespread - threatening not just the readymade garment (RMG) sector but also related industries, such as leather, plastic, agriculture, logistics, and financial services.

As the countdown to August 1 begins, stakeholders fear that failing rapid and coordinated government action, Bangladesh could lose its competitive edge on the US market - a loss that could take years to recoup and cost millions of jobs.

"This is not just a trade issue, it's a national emergency," says Shovon Islam, managing director of Sparrow Group.

"If we think only our US-bound RMG exports will suffer, we are gravely mistaken. Buyers source from one country for multiple markets. The consequences will cascade."

Speaking on condition of anonymity, the country manager of a European apparel brand said, "If the tariff issue is not resolved in Bangladesh's favour, it could reduce our business opportunities here."

He also said, "Although the US market accounts for less than 10 per cent of our total sales, it would no longer be a viable business case for us to produce goods for them from Bangladesh. We may have to consider alternative sourcing options."

The RMG and textile sectors alone directly employ nearly 4.0 million workers, with another million jobs supported indirectly in the backward-linkage industries and support services.

If the tariff hike comes into effect and order volumes fall, industry insiders say, a million jobs could be lost within two months.

Sparrow Group, which employs 18,000 workers and pays over Tk 400 million in monthly wages, exports products worth around $300 million annually, and half of that are destined for the US.

"If this market collapses, we will not last more than two months," Islam forewarns.

Similarly, Asian Group, a leading Chattogram-based apparel exporter with nearly $340 million annual exports - 93 per cent of which go to the US - has expressed serious concern.

"If the government fails to secure a favourable arrangement, we may not survive," says its Executive Director Khondaker Belayet Hossain.

"We pay Tk 600 million in monthly wages, while the overall operating cost stands at Tk 700 million."

He also says he is worried about how he would manage in the coming days if the tariff issue does not end in Bangladesh's favour.

"One of our major buyers - US retail giant Walmart - has continued current orders but is uncertain about the next season. They are already evaluating the situation," Hossain notes.

He further says the entire industry is vulnerable and about 95 per cent of RMG-factory owners would not be able to pay workers beyond a month if the situation does not improve.

"We have failed to convey to the nation the true nature of RMG profitability. When we acquire new factories, it is not for immediate profit but to consolidate operations and reduce overheads," Hossain explains.

Major buyers like Walmart, Gap, Levi's, American Eagle, and C&A, whose combined annual sourcing from Bangladesh exceeds $5 billion, are already reconsidering future orders.

Several buying houses have asked factories to delay production and shipments until further notice.

Ha-Meem Group, Bangladesh's top RMG exporter, pays Tk 900 million in monthly wages to its employees.

Industry sources say up to 70,000 jobs at Ha-Meem alone could be at risk if exports slow down.

Data from the National Board of Revenue (NBR) show 2,377 Bangladeshi firms exported to the US in FY25.

Among them, 801 depend on the US for more than 50 per cent of their total exports, making them particularly vulnerable.

Collectively, these companies exported $6.62 billion worth of goods globally in FY25, with $5.05 billion - 58 per cent of Bangladesh's total exports - to the US.

Bangladesh exports nearly $10 billion worth of goods to the US annually, including leather, plastic, and agro items.

"If order volumes decline, the spill-over effect will ripple across spinning mills, dyeing units, accessory makers, transport operators, banks, and insurers," says Fazlee Shamim Ehsan, a member of the Bangladesh Employers' Federation executive committee.

Backward-linkage industries - such as spinning, dyeing, accessories, and chemicals - are heavily dependent on export volumes.

A reduction in the US-bound shipments would inevitably hurt their operations, leading to layoffs and financial strains, experts say.

Similarly, thousands of jobs in the domestic logistics and transport businesses - freight forwarding, clearing and forwarding (C&F) agents, and warehouse operators - are tied to the export- supply chain.

These businesses fear revenue losses if US buyers scale back orders or shift sourcing to alternative countries.

Financial services, such as export financing, trade insurance, and customs brokerage, too, are expected to come under pressure.

"Any disruption to trade volume affects our loan performance. Many exporters rely on back-to-back letters of credit (LCs) and factoring support, which will get strained if US orders shrink," says a senior official at a leading commercial bank.

Insurers are also bracing for a possible drop in marine and export-credit insurance premiums, with fewer goods being shipped abroad.

Meanwhile, local small and medium enterprises (SMEs) that supply to export factories fear they could be the first to face closures.

Despite being one of the largest sources of imports for the US, Bangladesh currently lacks preferential-market access.

In contrast, countries like Vietnam, India, and Sri Lanka have pursued strategic trade diplomacy by offering the US imports, such as liquefied natural gas (LNG) or cotton, in exchange for tariff relief.

"India, Vietnam, Indonesia, and others have negotiated effectively. We failed to present reciprocal offers," Sparrow Group's Islam observes.

"We have seen how Chinese exports to the US dropped by over $100 billion under the Trump-era tariffs. Bangladesh could face the same fate," he adds.

He has called for urgent high-level diplomatic interventions, suggesting economists and experienced business leaders be dispatched to Washington to negotiate a settlement before the tariff becomes effective.

On Tuesday, after a meeting with business leaders, BNP standing committee member Amir Khasru Mahmud Chowdhury urged the government to strengthen its negotiations with the US by involving businesses, political parties, and industry leaders.

"If not addressed properly, the tariff issue could severely impact our economy, employment, and exports," he said.

He warned that over $8 billion in exports and 1.5 million jobs are at risk, stressing that political consensus is essential on the matters of national interest.

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