Can exporters pivot to other markets to save jobs?

In late August, the US doubled duties on Indian goods to 50 percent, in what President Donald Trump described as a punishment for India’s purchases of Russian oil. Brands reacted immediately, postponing or cancelling orders and leaving factories in hubs like Tiruppur and Bengaluru half-filled. With shifts cut and workers laid off, the shock ricocheted through India’s export economy, exposing how little protection garment workers have while relief talks and trade diplomacy drag on.

Senior correspondent Sheena Butler-Young and executive editor Brian Baskin are joined by BoF reporter Shayeza Walid to trace how trade policy in Washington quickly impacted the lives of India’s garment workers. 

Key Insights: 

• The tariff that came into place at the end of August led some suppliers to feel “punished for something they didn’t have any hand in,” as Walid puts it. She adds: “That penalty was linked to India’s continued purchases of Russian crude oil,” and “it hit very fast because brands immediately reacted to it once the 50 percent came into place.”

• The disruption hit export hubs first and hardest. With brands reluctant to absorb the shock, factories have been left to “bear the brunt,” passing the pressure onto the most vulnerable link in the system. The result is workers facing furloughs, layoffs and open-ended uncertainty. “These workers are largely migrant workers who… don't have the power to collectively bargain and kind of demand what they have the right to”, says Walid. As a result, migrant garment workers are bearing the brunt through layoffs, furloughs and lost income. 

• The response from Western brands has been silence and arm’s-length accountability, as most work through layers of sub-contractors in India. Walid says that, despite public rhetoric on labour rights, “in practice, there's not anything in place that would fix … these short-term contracts and brands not knowing where subcontracting factories are connecting with suppliers.” During Covid, watchdog pressure pushed some labels to repay cancelled orders, but “at this moment, that’s not something that we’re seeing,” Walid notes. In the meantime, a few large exporters are temporarily absorbing parts of the tariff to keep relationships alive – an approach suppliers themselves say is unsustainable – while smaller factories shut and workers absorb the shock.

• Beyond geopolitics, commercial terms and supply-chain opacity push risk onto workers. “It’s really the purchasing practice and the way contracts work in the supply chain. In the exporting industry, that leaves workers in this really helpless condition,” says Walid. Complexity of the system also weakens accountability: “It’s really extraordinarily difficult to get data and direct kind of causality from a particular brand,” and in hubs like Tirupur, “subcontracting factories are essentially the main suppliers to these bigger factories because they just get such large volumes.”  

Additional Resources:

• India’s Garment Workers Are Paying the Price for Trump’s Tariffs | BoF  
• Trump’s 50% Tariff Sows Fear Inside Indian Apparel Hub | BoF 

Hosted on Acast. See acast.com/privacy for more information.