Bangladeshi garment exporter Shahidullah Asim woke up on Thursday to the shock of US President Donald Trump imposing a 37% tariff on his country’s exports, imperiling a garment hub already reeling from domestic political turmoil.
“We knew something was coming, but we never expected it to be this bad. This is terrible for our business and for thousands of employees, including North American and European retailers,” said Asim, whose clients include North American and European retailers.
Suppliers to the garment industry in Bangladesh, including Gap Inc., which is considered a new tab, and VF Corp., the parent company of Vans, told Reuters, opening a new tab as clients, and began seeking government support hours after Trump’s lightning strike.
Some companies in the poor South Asian country are pressuring government officials to continue negotiating tariffs with the United States to avoid foreign buyers turning away to save costs.
The garment industry is vital to Bangladesh’s economy, accounting for more than 80% of total export earnings, employing 4 million people and contributing roughly 10% to its annual gross domestic product.
Trump’s global tariff crackdown is the latest and most severe blow to the industry.
Last year, violent protests that ousted Prime Minister Sheikh Hasina in August disrupted garment production, casting doubt on the long-term potential of a market highly sought after by Western fashion brands.
Azim said his company, which employs 3,200 factory workers, is bracing for order cancellations because rising costs for buyers could end Bangladesh’s competitive advantage.
A representative of the Bangladesh Garment Manufacturers and Exporters Association, which supports more than 2,500 factories, told Reuters that it had approached the government on Thursday to seek support against the tariff hit, and that the issue was being taken seriously.
Interim government press secretary Shafiqul Alam said in a statement that the United States was a “close friend” and Bangladesh’s largest export destination. He said Dhaka was working with Washington on trade matters and hoped the talks would “help resolve the tariff issue.”
Bangladesh’s loss is in some ways a gain for neighboring India.
Anwar-ul-Alam Chowdhury of apparel maker Evins, which has been receiving more inquiries from U.S. suppliers since last year’s political crisis in Bangladesh, fears that India will benefit even more now that it faces Trump’s lower 27% tariff.
The Evins Group website says it has Tommy Hilfiger and Levi Strauss & Co. (LEVI.N) as clients, opening a new tab, and deals in woven shirts, denim and yarn.
“Bangladesh will be among the hardest-hit countries,” Chowdhury said.
India accounts for only 6-7% of US apparel imports, far behind Bangladesh and Vietnam, and the top 30 US apparel brands, a survey by the Fashion Industry Association of America showed, have shifted their preference from Bangladesh to India due to the political crisis last year.
Another major South Asian casualty of Trump’s “reciprocal tariff” move is Sri Lanka, which now faces a 44% tariff.
About 40% of Sri Lanka’s apparel exports go to the US, which helped the country earn $1.9 billion last year. The garment sector is also Sri Lanka’s second-largest foreign exchange earner; the sector employs 300,000 people.
Sri Lankan President Anura Kumara Dissanayake’s office said in a statement that a panel of government officials and garment companies has been formed to study “potential issues” that could arise from the new tariffs.
“Sri Lanka could soon see its share of American business shift to countries with lower tariffs,” said Yohan Lawrence, general secretary of the Sri Lankan Federation of Garment Associations. “This situation is serious and should be treated as a matter of national urgency.”
