For many years, China has dominated the global textile industry. However, its stronghold may soon falter as trade dynamics shift, manufacturing costs increase, and geopolitical tensions reshape the landscape.
Despite Beijing’s lavish efforts to court global business leaders at the annual China Development Forum this week, all is not as well as it seems.
Last month, Washington imposed an unprecedented 10% blanket tariff on Chinese imports, escalating overall duties to between 25% and 35% and pushing the world’s top two economies one step closer to an all-out trade war. Refusing to be “bullied,” China swiftly announced its own retaliatory tariffs on $21 billion worth of American exports, targeting politically sensitive sectors such as agriculture, technology, and automotive products.
The looming risk of tit-for-tat tariffs, combined with abrupt and unpredictable policy shifts, has prompted major Western textile giants to retreat from China, not just for cost reasons but to minimize their geopolitical exposure. Steve Madden has already announced its exit, and PVH Corp., owner of Calvin Klein and Tommy Hilfiger, looks to be next in line.
As Beijing’s dominance fades, a new player is emerging into the spotlight. Cost-competitive, strategically positioned, and already a major force in global apparel, Bangladesh is quietly establishing itself as the epicenter of textile manufacturing.
Already the third-largest textiles supplier to the US, Bangladesh now holds a sharp cost advantage, with standard duties of just 15.6%. As global retailers seek to diversify their supply chains as quickly as possible, major brands are increasingly shifting orders to alternative hubs. As a result, China’s share of US apparel imports has been steadily shrinking, while Bangladesh’s has surged to record highs, now accounting for 7-8% of global apparel exports.
Bangladesh now stands as the world’s second-largest garment exporter, with over $38 billion in clothing exports last year. The country’s growth has been particularly striking in major markets—US apparel imports from Bangladesh climbed to 27% in Q4 2024, reaching a record high despite domestic political unrest. At one point, exports to the EU skyrocketed by 38% year-on-year, far outpacing China’s sluggish growth in the region.
The COVID-19 pandemic accelerated this shift. While China’s apparel exports to the US plunged by 31% due to factory shutdowns and logistical disruptions, Bangladesh quickly overcame its initial setbacks—including a 16.93% decline in exports and a 7.4% drop in employment—by swiftly ramping up production and pivoting to PPE manufacturing. This agility cemented Bangladesh’s role as a linchpin of ‘friendshoring,’ making it a key beneficiary of Western efforts to secure their supply chains through politically stable, lower-risk partners.
Fast fashion giants like H&M, Zara, Walmart, and Target have already deepened their ties with Bangladesh, alongside several US brands expanding their footprint in the country. Swedish retailer H&M sources from around 1,000 Bangladeshi factories, while Spain’s Zara has integrated the country into its core manufacturing network.
Chinese firms are even relocating to Bangladesh to sidestep tariffs and leverage its trade perks, creating a striking symbiosis and enshrining Bangladesh as a natural extension of major global supply chains.
It’s not hard to see why. Bangladesh has recently been reborn as a leader in green textile manufacturing, hosting 229 LEED-certified factories. Energy efficiency, water conservation, and waste reduction are prioritized throughout the industry—capturing global demand as brands face mounting pressure to clean up their supply chains.
Automation and technological upgrades are further strengthening the country’s global standing. More than 80% of factories plan to introduce advanced machinery by 2025, increasing productivity and enhancing quality. The shift towards synthetic fibre textiles, digital wage payment systems and factory modernization showcases the country’s ambition to climb the value chain.
These efforts, coupled with government-backed infrastructure upgrades, reinforce its competitiveness at a time when brands—not to mention consumers and shareholders—are seeking cost efficiency at the highest standards.
The momentum is clear to see. Bangladesh’s ready-made garment (RMG) exports surged by 7.23% in 2024, reaching $38.48 billion, driven by vertical material integration, automation, and trade advantages unavailable to China.
But its progress is not without challenge—vertical integration comes alongside extended transit times for raw materials, potentially delaying the delivery of goods to North American buyers. This logistical complexity may pose difficulties for brands prioritizing speed to market, but younger generations may be willing to wait for more sustainable options.
If Bangladesh plays its cards right, it could cement its position not just as a beneficiary of shifting trade patterns but as a dominant force in the industry. The challenge lies in transforming short-term gains into lasting leadership, particularly as Bangladesh prepares to graduate from its Least Developed Country (LDC) status by 2026.
However, while the country has benefited from the US-China tariff war, its long-term success will depend on the effective management of any reciprocal tariffs and its ability to secure reliable trade advantages. Efforts to extend duty-free privileges or transition into the EU’s Generalized Scheme of Preferences Plus (GSP+) scheme are already underway, ensuring continued preferential access to European markets.
Still, with Washington’s policymakers doubling down on their scrutiny of global trade, Bangladesh will have its work cut out. If it can present itself as a sustainable, reliable, quality replacement for China, it may well emerge from the chaos bigger and brighter than ever before.
