Through Covid, political turmoil and economic turmoil, Sri Lanka and Bangladesh maintained industries at the heart of hope for prosperity. It manufactures ready-made garments, US as its main market.
Then came the Trump tariffs.
Both countries are upset after Sri Lanka was hit by a 44% tariff and Bangladesh received a 37% tax. Officials from both countries were rushing to contain the panic among business leaders. Business leaders worry that they may not be able to compete with larger manufacturing capabilities, and the orders could move to places where tariffs are low and industrial muscles are larger.
“We have to write our deceased memories,” said Tuli Cooray, consultant at the Industry Association's Joint Apparel Association forum in Sri Lanka. “44% are no joke.”
The Trump administration's tariffs are particularly violently hitting countries at the heart of the global apparel industry. An analysis by stock research firm William Blair shows that countries that produce 85% of US apparel imports face tariffs of an average of 32%.
It warned analysts that targeting manufacturers would not only overturn the economies of these countries, but would also increase the burden on US companies. William Blair said product costs could rise by around 30%, and American consumers might ultimately feel a pinch.
Bangladesh sends over $7 billion in clothing to the United States every year. The country's clothing manufacturing industry accounts for 80% of total exports, employing over 4 million people, primarily women. Bangladesh has one of the highest participation rates of women's labor force in the region. This helped to lift a large portion of the population out of poverty.
The clothing industry is extremely important as the country tries to stabilize its economy after the widespread protests and violence overthrew authoritarian leaders last year.
“As the global economy begins to recover and sales in the US are increasing, these kinds of decisions — the trade war, or the tariff war — are now poses new challenges and uncertainties,” said Mohiudin Ruebel, former director of the Association of Clothing Manufacturers and Exporters in Bangladeshi.
“There are many garment factories in Bangladesh that work only in the US market, some 80% and 100%. These factories are investing heavily on US orders alone,” he added. “This decision would put such businesses at risk.”
Sri Lanka employs more than 350,000 people in the clothing industry and produces apparel for businesses such as Nike and Victoria's Secrets. Clothing accounts for about half of the country's total exports, with the majority going to the US
After the country's economy crashed in 2022, it has slowly stabilized with the help of aid from neighbors like India and relief from the International Monetary Fund.
Anil Jayantha Fernando, Sri Lanka's Deputy Minister of Economic Development, said:
