Press pause: Garment workers walking out of their factory during their lunch break in Phnom Penh, Cambodia.
Across Asia, unions and industry groups are raising alarms over the impact of higher tariffs by the United States on garment workers.
High tariffs might force companies to shut down or move to neighbouring countries that offer lower tariff rates, resulting in a loss of jobs, they say.
Several countries in Asia have gotten notice of new tariff rates imposed by the United States to take effect Aug 1, after a 90-day pause on tariffs came to an end.
Manufacturing hubs such as Bangladesh and Cambodia will face high tariffs of 35% and 36% respectively, while neighbouring countries are still negotiating with the US government.
In Bangladesh, the 35% tariff announced by the United States is more than twice the current 15% rate on Bangladeshi goods.
“With more than doubling tariff rates, can you imagine how the cost of the products will rise?” asked Mohiuddun Rubel, a former director of Bangladesh’s garment manufacturers’ association BGMEA and now additional managing director at textile maker Denim Expert Ltd.
Garment workers buying food at a sidewalk in Ang Tako village. — AFP
In 2024, Cambodia exported nearly US$10bil (RM42.5bil) worth of goods to the US, which accounted for nearly 40% of the nation’s total exports, according to government customs statistics.
More than half of US imports from Cambodia were garments, footwear and travel goods such as luggage and handbags, a sector that makes up nearly half of the country’s export revenue and employs more than 900,000 workers.
While Cambodia is looking at a tariff rate reduction from 49% in April, anxiety permeates its garment industry, which employs hundreds of thousands of people and is one of the developing nation’s key economic pillars.
“The potential loss of jobs will cut the income and ability for workers to sustain their daily lives,” said Ath Thorn, vice-president of the Coalition of Cambodian Apparel Workers’ Democratic Union, which represents 80,000 workers across 40 factories.
Eye for detail: Garment worker Raimoni Bala, 32, working inside the sewing section of a garment factory in Ashulia, on the outskirts of Dhaka, Bangladesh. — Reuters
Meanwhile, the United States and Vietnam have struck a trade agreement that set 20% tariffs on Vietnamese goods.
With a neighbour next door with a significantly lower tariff, many companies may choose to leave Cambodia, said Yang Sophorn, president of the Cambodian Alliance of Trade Unions, which represents thousands of women who support their families as garment workers.
The fear is echoed by experts in Bangladesh, which faces a 35% tariff.
Selim Raihan, a professor of economics at the Dhaka University, said if tariff rates on Bangladesh’s competitors like India, Indonesia and Vietnam prove to be lower, Bangladesh would face a serious competitive disadvantage.
Such a disadvantage could make supply chain decision-making more difficult and erode the confidence of buyers and investors, Selim said.
Orderly fashion: Garment workers tailoring clothes at their sewing stations in a factory in Tongi, on the outskirts of Dhaka. — AFP
“As production costs rise and profit margins shrink due to the tariff, many garment factories may be forced to scale back operations or shut down entirely.”
The question is what happens to the tariffs for main competitor countries like India and Pakistan, said Mohiuddun.
The United States is negotiating a trade deal with India, while reciprocal tariff rates for Pakistan have not been announced yet.
Potential layoffs within the garment industry will have an outsized effect on women workers, which Sophorn said would cripple entire families.
“If these women lose their jobs because high tariffs force factories to shut, it will not only impact Cambodia’s economy, but now children may not be able to go to school and aging parents may not be able to afford medicine,” Sophorn said.
Many of the women she represents have taken bank loans to support their families and work in the garment industry to pay off their debts.
“If they lose their job, it means they will lose everything,” Sophorn said.
Thorn suggested Cambodia continue negotiations to get the tariffs down or find other ways to export more products, generate more income and create more work.
“If not, we will face problems,” he said. — Reuters
