US Trade Policies Cast a Shadow Over Asian Apparel Manufacturing

Manufacturers and suppliers across Asia are expressing concern about the future of their apparel businesses due to the implementation of significant tariffs. These tariffs, imposed by the US, are seen as a threat to the industry.

The US government has introduced particularly harsh tariffs on major apparel manufacturing countries in Asia. Cambodia faces a 49% levy, followed by Vietnam at 46%, Bangladesh at 37%, Indonesia at 32%, and India at 26%.

These tariffs are pressuring companies in South Asian countries, such as Sri Lanka and Bangladesh, to urge their governments to negotiate with the US administration. The goal is to prevent foreign buyers from seeking lower costs elsewhere.

The tariff increases will directly impact fast-fashion retailers and sportswear brands that manufacture in Vietnam, Bangladesh, Indonesia, and Sri Lanka. The US is a major consumer of apparel and footwear, but a small percentage of these goods are produced domestically.

During President Trump's first term, manufacturing hubs in South Asia benefited from tariffs on China, which led apparel and footwear makers to relocate to other parts of Asia. However, the new tariffs have created significant challenges for these businesses.

Garment exporters are anticipating order cancellations due to rising costs. This could eliminate the competitive advantage of countries like Bangladesh. The ready-made garment industry is crucial to Bangladesh's economy, representing a large portion of export earnings, employing millions, and contributing significantly to its annual GDP.

Bangladesh, the second-largest producer after China, manufactures garments for numerous global brands. Manufacturers are worried that buyers will be forced to seek more cost-effective markets, which would severely impact the industry in Bangladesh.

The International Apparel Federation has described the tariffs as a "major shock," emphasizing that someone will ultimately bear the financial burden.

In Sri Lanka, the garment industry exports a substantial portion of its output to the US, generating significant revenue. The tariffs threaten the jobs of over 350,000 garment industry employees. Apparel is also a major source of foreign exchange for Sri Lanka, aiding its economic recovery. The Sri Lankan government has formed a panel to assess the potential consequences of the new tariffs.

Trade groups have expressed disappointment with the US decision, stating that it will negatively affect American fashion brands and retailers.