Uneven Threads: How U.S. Trade Tariffs Are Reshaping Garment Supply Chains and Workers’ Lives in South and Southeast Asia

Recent shifts in U.S. trade tariffs on apparel imports are rapidly reshaping sourcing strategies across global garment supply chains, with deep repercussions in Bangladesh, the Philippines, and India. As brands respond to tariff uncertainty by shifting orders, delaying contracts, or demanding steep discounts, factories adjust production in ways that directly affect workers’ hours, job security, and bargaining power.

This article examines how trade policy volatility reverberates through workplaces and labour conditions, shaping livelihoods and testing already fragile worker protections. For millions of garment workers across South and Southeast Asia, tariffs have not only altered trade flows, they have intensified vulnerabilities in an industry already defined by precarious employment and thin margins. The garment sectors of Bangladesh, India, and the Philippines are central to national economies and local livelihoods, yet when trade conditions tighten, the pressure quickly reaches the workers who stitch, cut, and finish clothes for global markets.

Volatile orders and shrinking factory margins

As brands recalibrate sourcing strategies amid trade tensions, their hesitation to commit to long-term orders undermines stability for both suppliers and workers. While tariffs are collected at the U.S. border, importers often pass the costs on to consumers and pressure suppliers to absorb the remainder through deeper discounts. Factories that rely heavily on U.S. buyers face an impossible balancing act: cutting costs to stay competitive while operating on already thin margins. Rising energy prices, currency fluctuations, wage obligations, and growing sustainability demands further strain suppliers. As consumers call for greener production and decarbonisation, brands increasingly require these investments from suppliers while offering limited financial support, a dynamic we explored in our post last month.

Uncertainty around tariff policies adds further instability. When tariffs on Bangladesh were at their highest, depending on garment type and fibre composition, goods from the same factory could face tariffs ranging from 16% to 52%, creating bureaucratic complexity and unpredictability.[i] Even after the U.S. Supreme Court struck down the tariffs and a temporary global rate of 15% was introduced, it remains unclear whether suppliers will recover losses or whether brands will pressure suppliers to maintain the lower prices.

In Bangladesh, union organisers report that discussions of layoffs have become a daily concern in export zones.[ii] Workers who endured pandemic-era closures now face renewed uncertainty as factories resort to workforce consolidation or unpaid leave to manage fluctuating orders. Similar patterns are emerging in India’s export clusters, where buyer discounts and delayed payments have triggered factory shutdowns and retrenchments. In the Philippines, frontloaded orders, driven by efforts to avoid tariffs, initially boosted production.[iii] Yet factories are already bracing for a slowdown, with smaller producers likely to bear the brunt through shorter contracts and reduced investment in compliance measures.[iv]

Across the region, factories increasingly report compressed lead times, sudden shifts in order volumes, and heightened demands for flexibility. On the shop floor, these pressures translate into shorter contracts, reduced overtime, and sudden layoffs. For workers, particularly women, who make up the majority of the garment workforce, the consequences are immediate: lower pay, suspended overtime, and more casualised employment with little security.

Labour rights under pressure

Tariff-driven volatility is amplifying power imbalances across garment supply chains, as commercial risk is pushed downward from brands to suppliers and ultimately to workers. 

Under mounting cost pressure and unpredictable production cycles, factories increasingly rely on short-term or informal contracts. Unionised workers are often the first to be dismissed when orders decline. Across Bangladesh, India, and the Philippines, reports have surfaced of wage delays, increased reliance on third-party labour contractors, discouragement of union membership, and workers being pressured into voluntary resignations.[v]

These patterns reveal not the absence of labour laws but the fragility of enforcement and political will. Governments and trade policies often prioritise competitiveness and investment over workers’ ability to organise and negotiate fair conditions. As trade volatility continues, these subtle forms of coercion risk becoming more common, reinforcing a cycle in which job insecurity weakens worker voice.

Social costs and fragile resilience

The consequences extend well beyond factory gates. In export-dependent regions, declining overtime or layoffs quickly translate into reduced household spending, food insecurity, and disrupted education for workers’ children. In Bangladesh’s garment hubs, women workers, often the primary earners in their households, may turn to informal lenders to cover essential expenses, increasing debt burdens that persist long after production stabilises.[vi] In India, the effects ripple through local economies, affecting transport operators, catering services, and small retailers linked to garment clusters.[vii]

At the same time, signs of adaptation are emerging. Some factories are diversifying their customer base or investing in process efficiencies to manage volatility. Worker organisations are renewing advocacy efforts around social protection measures, including income support during layoffs, retraining opportunities, and gender-sensitive cash assistance. Yet these initiatives remain fragmented and limited in scale compared with the millions of workers whose livelihoods depend on export-driven demand.

Keeping workers at the heart of trade debates

Ultimately, evolving U.S. tariffs are not merely economic policy decisions. Their effects are felt most sharply by workers navigating job instability, shrinking bargaining power, and deteriorating labour conditions. As uncertainty around orders and pricing persists, governments and trade negotiators must integrate labour impact assessments and safeguards into tariff decisions. Brands, in turn, must align purchasing practices with their stated commitments to fair and responsible sourcing.

Meanwhile, worker unions and civil society across the region continue documenting labour abuses, pushing for stronger enforcement, and advocating for more stable, rights-respecting employment. Without centring the rights and voices of workers, any recalibration of supply chains risks deepening inequality both within and between nations. 

Sources

[i] https://apparelresources.com/business-news/trade-business-news/bangladesh-yet-receive-formal-us-clarification-tariffs-says-commerce-minister/

[ii] https://www.reuters.com/business/world-at-work/after-us-tariffs-jobs-hang-by-thread-bangladeshs-garments-sector-2025-07-09/

[iii] https://www.business-humanrights.org/en/latest-news/philippines-garment-exports-expected-to-reach-1-billion-as-brands-frontload-orders-to-avoid-impact-of-tariffs-wpftc/

[iv] https://context.ph/2026/01/12/tariffs-production-cost-squeeze-philippine-garment-exports/

[v] https://www.amnesty.org/en/latest/news/2025/11/garment-industry-profits-from-denial-of-right-to-unionize/ 

[vi] https://workerdiaries.org/high-rents-trap-bangladeshs-garment-workers-in-a-cycle-of-debt/

[vii] https://apparelresources.com/business-news/manufacturing/factories-links-us-market-pressure-survey/