Trump tariffs hit Bangladesh apparel factories, threaten workers’ jobs

DHAKA — Garment supplier Abdullah Al Mamun woke up on Thursday morning last week only to receive worrisome messages, a day after U.S. President Donald Trump slapped a 37% “reciprocal” tariff on Bangladeshi products in addition to a usual 15% tariff.

The bad news was brought in by his U.S. clients, who asked him to put production and shipment of goods on hold against the orders they had placed for May, June and July.

“Orders for 600,000 pieces of apparel items have been put on hold till June,” Mamun told Nikkei Asia. He is the owner of Sense Garments BD, a buying house that sources $1.5 million worth of goods monthly from two factories in Dhaka for his American buyers. The factories bought many raw materials to prepare the goods already. “With production halted due to new tariffs, the factories won’t be able to withstand the pressure and will be shut one after another unless a favorable solution comes,” Mamun said.

The reciprocal tariffs Trump announced last week have perplexed political and business leaders worldwide and have made the future of trade with the U.S. equally uncertain. Although Trump announced on Wednesday a 90-day reprieve on reciprocal tariffs, the uncertainty remains given the outcome of possible bilateral negotiations.

The impact of Trump’s moves may differ not only due to the difference in the applied tariff rates that vary from country to country but also due to who the actual beneficiaries of the trade are, and in the case of labor-intensive industries in emerging countries, a sudden break in exports to the U.S. could trigger massive job loss for low-income earners, potentially leading to social unrest.

Bangladesh’s apparel industry, which employs millions and is the fourth largest exporter for U.S. clothing brands, is a perfect example.

Mamun is not alone. The owner of Dhaka-based Accenture Footwear and Leather Products, AKM Mosphiqur Rahman, was also forced to stop procedures for the shipment of leather bags worth $300,000 on Sunday after receiving a directive from a U.S. buyer. He told a business group meeting on the day that the American buyer wanted to negotiate a discounted price to make up the losses to be incurred by the tariffs.

Mamun and Rahman are two of the many exporters who have been asked by the buyers to hold production or shipment.

“Many factories will be closed” if the new tariff actually takes effect, Mohammad Hatem, president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told Nikkei, adding that a job cut is imminent as production will be halted or lessened in many factories.

Faruque Hassan, former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), feels American buyers are currently losing a sense of normalcy. “Buyers should be more sensible since the new tariff is not our fault,” he said. Since Bangladesh factory owners offer very competitive prices, “seeking discounts, cancelling orders or putting a work order on hold wouldn’t be rational.”

Although some apparel factory owners in Bangladesh have avoided addressing Trump’s tariffs with their employees, many workers fear losing their jobs. (Photo by Yuji Kuronuma)

In 2024, Bangladesh exported goods worth over $8 billion to the U.S., while imports from there amounted to slightly more than $2 billion. Apparel and textile-related products account for 84% of Bangladesh’s exports, backed by around 3,000 garment factories and millions of workers.

According to a government disclosure last year, 3.3 million workers are in BGMEA’s member factories and 1.7 million are in BKMEA’s member factories. The majority of the factories’ employees are women.

Among them is Maria Akter, who contributes to her rickshaw puller father to pay house rent in Dhaka with her salary from an apparel factory. “I can’t imagine what will happen, if the factory shuts,” she said. “I am not sure if I will be able to get another job if many factories are closed.”

For Bangladesh, the export-oriented apparel industry has been the engine of growth in household income, having helped the once-poorest country graduate from the lower-income category set by the World Bank and become a lower-middle-income country in 2015. Women workers’ wages have also contributed to a significant growth in their household income and improved purchasing power.

But household income levels still remain the lowest among the major apparel exporters to the U.S., with its GDP per capita in 2024 estimated as $2,625 by IMF, leaving the country lower than China, Indonesia, Vietnam and other Asian peers.

“Exports falling means a production cut, which will lessen demand for workers, thus they will loss jobs,” Amirul Haque Amin, president of the National Garment Workers Federation, fears, predicting that a 10% to 20% job cut may take place eventually.

And what Amin foresees beyond the job losses is the possible destabilization of the country. There would be “massive” social unrest “if a good number of factories stop production, leading to huge unemployment in a poor segment of people,” he said.

Khondaker Golam Moazzem, an economist at the Dhaka-based Centre for Policy Dialogue, sees a possible positive impact that some of the large scale Bangladesh factories may be fortunate to receive from Trump tariffs. Due to the reciprocal tariffs, American orders could be shifting from China to Bangladesh and big factories may have scope for expansion and absorb some workers who lost jobs in the small factories, he said.

The expectation of grabbing orders originally placed in Chinese factories is growing, particularly after Trump’s Wednesday announcement of the 90-day reprieve. “The United States on Thursday raised 125% tariff on Chinese exports,” said Mohiuddin Rubel, a former director of BGMEA. “Bangladesh has the potential to grab a significant portion of China’s garment exports to the United States, as well as Chinese investment, if the tariff rate remains the same for long.”

But for Moazzem, if the reciprocal tariffs are actually imposed, “it is certain that small factories would not be able to sustain [themselves] due to the pressure, thus a job cut will be for sure.”

“Since we heard about the imposition of high tariffs by the U.S., many of us are afraid of losing jobs,” said Maria, the factory worker in Dhaka. Her factory owner and senior officials have not informed their workers about the Trump tariff to avoid creating anxiety among the employees. Still, everyone knows it already from TV news or elsewhere.

“Ours is a small factory. The chance of lessening work orders is high, thus the factory may shut down,” she fears.

The article appeared in the asia.nikkei