Bangladesh's Sweater Business Study 2026: Phase -1

Bangladesh’s Sweater Business Study 2026: Phase -1

Part 1: EU Market
▪️Bangladesh’s Position in the EU:

The European Union remains the largest buyer of Bangladesh’s knitwear, accounting for nearly 60% of total knitwear exports. The US is the second-biggest market, followed by the UK, Canada, and Australia. Bangladesh overtook China as the leading knitwear exporter to the EU for the first time in 2023, with knitwear exports reaching $9 billion in the first three quarters of that year — narrowly edging out China’s $8.96 billion. This success was attributed to investments in higher value-added items, particularly activewear.

▪️LDC Graduation Risk:
Upon LDC (Least Developed Country) graduation in 2026/2029, Bangladesh may face EU tariffs of nearly 12% without GSP+ trade status — a significant threat to the price competitiveness that has driven its EU dominance. Projections suggest a potential 10% export dip to the EU by 2026 if preferential trade access (Everything But Arms) is not renewed or replaced.

Part 2: US Market
▪️Bangladesh’s Position in the US:
Bangladesh earned $8.51 billion from apparel exports to the USA in FY2023, with the US accounting for approximately 18–20% of total RMG exports.
▪️ Price Gap Between EU and US:
A recent study found that Bangladesh’s apparel exporters receive, on average, about 10% lower prices in the US market than in the EU, mainly due to the absence of duty-free access in the US. The study also found that firms focused on knitwear exports receive 10–13% lower average prices, suggesting knitwear — including sweaters — is sold at relatively lower unit prices overall.
▪️ US Tariff Shock: 2025
In April 2025, the US announced reciprocal tariffs on Bangladesh, setting the rate at 37% on apparel on top of an existing 16.5%, pushing the effective rate to 53.5%. After negotiations, this was reduced to 20% from August 2025, bringing the effective rate down to 36.5% — still significantly higher than before.