By The Straits Times | Created at 2025-04-04 03:04:29 | Updated at 2025-04-04 22:38:32
21 hours ago
COLOMBO/DHAKA – Through Covid-19, political chaos, and economic disarray, Sri Lanka and Bangladesh kept one industry central to their hopes of prosperity afloat: the manufacturing of ready-made garments, with the United States as their main market.
Then came US President Donald Trump’s tariffs.
The two countries are reeling after Sri Lanka was hit with 44 per cent tariffs and Bangladesh subjected to 37 per cent levies.
Officials in both countries scrambled to contain panic among business leaders, who worried that they may no longer be able to compete with bigger manufacturing powers, and that their orders could shift to places with lower tariffs and greater industrial muscle.
“We will have to write our obituary notice,” said Mr Tuli Cooray, a consultant at the Joint Apparel Association Forum of Sri Lanka, an industry association. “Forty-four per cent is no joke.”
The Trump administration’s tariffs have hit countries at the heart of the global apparel industry especially hard. An analysis by William Blair, an equity research firm, showed that the countries that produce 85 per cent of US apparel imports faced an average tariff of 32 per cent.
Targeting the manufacturers not only upends the economies of these nations but also adds to the burden of US companies, analysts warned. William Blair said merchandise costs could go up by about 30 per cent, and American consumers may ultimately feel the pinch.
Bangladesh sends more than US$7 billion (S$9.33 billion) of clothing to the US every year. The country’s garment manufacturing industry makes up 80 per cent of its total exports and employs more than four million people, mostly women. Bangladesh has one of the highest female workforce participation rates in the region, which has helped lift a large section of the population out of poverty.
The garment industry is crucial, as the country tries to stabilise its economy after widespread protests and violence in 2024 toppled its autocratic leader.
“Just as the world economy was starting to recover and we were seeing our sales in the US increase, this kind of decision – a trade war or a tariff war – has now posed a new challenge and uncertainty,” said Mr Mohiuddin Rubel, a former director of the Bangladesh Garment Manufacturers and Exporters Association.
“There are many garment factories in Bangladesh that work solely for the US market – some with 80 per cent, some even 100 per cent. These factories have made large investments just for US orders,” he added. “This decision will put such businesses in danger.”
In Sri Lanka, the garment industry employs more than 350,000 people, producing apparel for companies such as Nike and Victoria’s Secret. Garments make up about half of the country’s total exports, and the vast majority go to the US.
After the country’s economy crashed in 2022, it has been slowly stabilising with the help of aid from neighbours like India and a bailout from the International Monetary Fund.
“We are trying to see if there is space for reduction before implementation on April 9 through discussions, especially considering the difficult situation we are in,” said Dr Anil Jayantha Fernando, Sri Lanka’s deputy minister for economic development. NYTIMES
Join ST's Telegram channel and get the latest breaking news delivered to you.
