"Stunned by Trump’s tariffs, world clothing suppliers are preparing to squeeze workers", 8 April 2025

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Of the 528 factories contracted by Nike to produce finished goods in 37 countries and regions across the world, just 28 of those are based in the US...

The rest, most of them at least, are in Asia – part of a decades-long policy of outsourcing production to countries where low wages have allowed the kind of mass production of low-cost clothing and footwear that has become a staple of globalised life. It is these countries... that supply Western brands with low-cost clothes, shoes and textiles. And it is these countries that have found themselves hit hardest by US President Donald Trump’s sweeping “Liberation Day” tariffs...

“In terms of cost, one of the major exporters of garments to the US is Bangladesh – I was just doing the math on the hourly rate. You're looking at a minimum wage in the US of $7.25 – that's the federal minimum wage, but many states have higher minimum wages. And we’re talking about four million workers in Bangladesh making garments at 55 cents an hour. I don't know how that gets replicated in the US or moved to the US.”

And while supporters of rebuilding the US manufacturing base often point to higher levels of automation as a way to maintain a competitive edge against low-wage countries, the physical act of cutting and sewing fabric has been notoriously resistant to automation...

The leaders of Vietnam and Bangladesh, both countries heavily dependent on exports to the US, have both pleaded with the US president for a stay of execution...

“The question is, where do you go if you're tariff shopping? And this is the other part of the story – the uncertainty. If there's one thing that concerns companies as much as cost, it’s uncertainty,” Anner said. “How do you start thinking of investment elsewhere if this could change in a moment's notice?”

Without knowing what respective countries’ tariffs are likely to be in the long-term, he said, it was difficult to imagine that companies would invest the time and capital needed to shift production across the world.

“We're looking at about a 37 percent tariff on Bangladesh, but 26 percent on India, 29 percent on Pakistan and 46 percent on Vietnam – but Vietnam is now looking to reach out and negotiate down,” he said.

“But where would you go? If it was more mobile, maybe you're looking at Bangladesh, you shift to India because it's just under 10 percent lower, or Pakistan – but you don't know who's going to renegotiate, and where this will end up. It's not really clear who might be losing work now.”

Faced with an uncertain future, garment manufacturers will likely do what they have always done in times of crisis: squeeze. Dina Sidiqqi, an anthropologist at New York University, said that the costs of the tariffs would inevitably be borne by the workers on the production line.

“Additional costs will be absorbed the way they always are – by passing them down to workers,” she said. “Manufacturers do not want to see a dip in their profit levels. They will compensate by reducing the number of workers, and increasing production targets of those who remain.” ...

“Bangladesh’s ‘comparative advantage’ in the global market depends upon the ability to provide the lowest possible cost of labour,” she said. “After four decades of a flourishing sector, Bangladeshi garment workers still have one of the lowest wages in the world – minimum monthly wage for today stands at 12,500 taka ($113 USD), far below the estimated living wage. There is no incentive for capital or the state to increase minimum wages in the current global garment supply chain.”

Anner said that without committing to moving production, competing on cost was the only option left to companies.

“In the garment sector historically, there's two ways to do that: to squeeze down on wages and to squeeze through productivity quotas – so, how fast you have to work, how many operations you need to do, how many collars you sew on per hour,” he said. “And that can go from 80 to 85 to 90, 92 (collars), and so on.”

Although major companies have more leeway to lean on suppliers to squeeze production costs, brands and retailers have already warned that they’re prepared to pass the added costs of the tariffs on to consumers.

The Footwear Distributors and Retailers of America – of which Nike is a member – has said that a $155 running shoe made in Vietnam would have to be marked up to $220 in US stores to compensate for the 46 percent tariff...

“It's not clear to me what percentage brands will take out of their margins and what percentage will be passed on to consumers,” Anner said. “But something will be passed on to consumers, and we know that would lead to a decline in demand, which would lead to a decline in the size of production orders, which would mean less workers would be needed – so we could see dismissals or cutbacks in hours as a result.”

The result, Siddiqi said, could well be the kind of economic chaos not seen in the sector since the height of the global Covid-19 pandemic...

“The pandemic made it clear that the global garment supply chain privileges brands and retailers, recalling older colonial relationships,” she said. “European and US brands were able to legally extricate themselves from contractual obligations once demand for clothing in their markets plunged, leaving manufacturers in the global South in the lurch. Factories closed down and hundreds of thousands of workers lost employment."

“The lesson, in other words, is that the model of low wage export-oriented manufacturing – in an unequal global economic order – leaves countries like Bangladesh deeply vulnerable to the vagaries of the market. The system distributes risks embedded in supply chains unevenly and downward.”

Should these tariffs become a permanent fixture of the world’s economy, she said, the global division of labour that has drawn millions of workers to production lines across South and Southeast Asia could be damaged beyond recognition.

“The consequences for workers and their families would be devastating, if brands withdraw orders from Bangladesh and place them elsewhere,” she said. “The ripple effects include having to withdraw children from schools and put them to work, and to forgo basic healthcare."...