Bangladesh’s apparel exports to the United States declined by 5.3% in the first half of 2026, as US buyers increasingly look beyond low production costs when choosing sourcing partners.

A new World Bank report found that Bangladesh is facing stronger competition from Vietnam, Indonesia and Cambodia. During the same period, US apparel imports from Vietnam rose 3%, while Indonesia and Cambodia recorded growth of 3.6% and 11.6%, respectively.

Overall, US apparel imports fell 7.1% in the first half of 2026. However, Bangladesh’s decline was sharper than that of several competing sourcing destinations.

The US remains Bangladesh’s largest single apparel export market. The country shipped around $4 billion worth of garments to the US between January and June 2026, accounting for about one-fifth of Bangladesh’s total ready-made garment exports.

The World Bank said US fashion companies are now placing greater importance on compliance, flexibility, supply chain transparency and resilience. Buyers are also diversifying sourcing locations to reduce geopolitical and supply chain risks.

Bangladesh remains one of the most cost-competitive apparel sourcing destinations. However, its utilisation rate among US buyers fell from 88% in 2025 to about 78% in 2026.

The report noted that Vietnam is performing better in areas such as flexibility and responsiveness. Emerging sourcing destinations, including Indonesia, Egypt, Jordan and Guatemala, are also gaining attention.

The World Bank said Bangladesh can strengthen its competitiveness by improving labour and environmental compliance, transparency, flexibility and integrated supply chain capabilities.

Despite the challenges, Bangladesh still has strong opportunities in the US market. Nearly half of surveyed buyers said they plan to increase sourcing from Bangladesh over the next two years.

The report suggests that low costs alone are no longer enough. Future growth will depend on Bangladesh’s ability to offer reliable, flexible and transparent supply chains alongside competitive pricing.