Out of all countries with manufacturing garment industries, Cambodia and Sri Lanka are currently suffering the most. The United States will also be bringing in new tariffs on August 1. The US president just recently notified both of these countries of these impending levies. These measures would deeply affect their economies and endanger the livelihoods of hundreds of thousands of workers.
Cambodia won an important 13 percentage point tariff concession from the United States. At the same time, Sri Lanka’s garment industry supports some 350,000 jobs and clocked in $1.9 billion in exports to the US last year. By comparison, Cambodia’s garment exports to the US exceeded $3 billion over the same timeframe. Summary of the rewritten paragraph US tariffs will almost certainly decrease Chinese inputs as part of American production. In the end, both countries will be at a competitive disadvantage to other countries such as Vietnam that have already obtained lower tariffs.
The garment industry happens to be the most important economic driver in both countries. In Cambodia, it accounts for over a tenth of all exports. In Sri Lanka, it is the third largest source of foreign exchange earnings. The US tariffs are very harmful to these sectors. This is troubling especially as, since 2005, the quota system that once insulated developing countries’ market shares has been dismantled, leaving them more susceptible to the vagaries of the global market.
In recent weeks, US President Donald Trump’s messaging on tariffs has been a reminder of just that. He thinks they’re essential for addressing the trade deficit between the US and its trading partners. He noted, “Our relationship has been, unfortunately, far from Reciprocal.” This blunt approach has understandably got many in industry and labor up in arms about the possible impact this would have on jobs and investment.
Forced labor has become embedded in the garment industry in both countries, due in large part to an overrepresentation of women. Women make up about 70% of the region’s garment workforce. A majority of these workers report feeling scared of their future and worried about losing their jobs. Nao Soklin, a garment worker, voiced her distress: “Can you imagine what will happen if we lose our jobs? I’m so worried, especially for my kids. They need food.”
Surangi Sandya, another industry representative, highlighted the potential consequences of decreased orders: “Companies don’t work at a loss. If orders decrease, if there is a loss, there may be a possibility that the company will shut down.” Few issues echo more powerfully in these communities than the fear of job losses.
Despite all of these challenges, authorities in Sri Lanka are still optimistic that they can negotiate a deeper cut in the tariff. Industry veteran and go-to-source Yohan Lawrence cautioned that tariffs could be as high as 30%. If that comes to pass, Sri Lanka would be at a major disadvantage compared to its Asian competitors. “If 30% is the end number, Sri Lanka is in trouble because our competitors, such as Vietnam, have received lower tariffs,” he said.
Cambodia is quickly becoming a new hot spot for international brands. Businesses such as Nike, Levi’s and Lululemon are attracted to the country’s virtually unlimited supply of low-wage labor. Sun Chanthol, a Cambodian government official, stated, “We are doing everything we can to protect the interests of investors and workers.” The Cambodian government has granted a larger concession after earlier negotiations, 14 percentage points.
As the tariffs come ever closer, workers such as An Sopheak are faced with no choice but to continue praying for a miracle. “We pray every day that President Trump will lift the tariff,” he lamented. The prognosis still hangs like the Sword of Damocles over America’s garment workforce who rely on these jobs to stay alive.
In fact, the potential repercussions of these tariffs go far deeper than jobs lost immediately. Mark Anner, a labor expert, remarked on the broader implications: “For the US to now impose prohibitive tariffs that effectively shut these countries out of the market goes against the very development path it once prescribed.”
As negotiations continue and both countries explore avenues for dialogue with US officials, many hope for a resolution that could alleviate some of the impending economic pressure. Harshana Suriyapperuma expressed optimism amidst uncertainty: “We see this as the beginning of a very good situation.”