As US Tariff Pressure Grows, Can Bangladesh Still Manifest a Just Transition?

Yahoo

25-07-2025

On a sunny, cloudless June afternoon in Stockholm, days before she was due to appear on stage at the Global Fashion Summit in Copenhagen, Kalpona Akter, the longtime labor activist, was feeling wistful. She said she couldn't help but compare the difference between working conditions in the Swedish capital and those of her native Bangladesh, where she was forced to sew clothing for Western brands amid the constant threat of physical abuse while still a child. The collective bargaining agreements that undergird labor relations in the more progressive parts of the global North were likely hard-won, Akter allowed. 'We don't have that environment yet,' she said.
The concept of a 'just transition' emerged in the United States in the 1970s after the now-defunct Oil, Chemical and Atomic Workers Union called for a fund to support workers who were losing their jobs because of a deluge of new environmental regulations that necessitated a career change. In the decades since, it has been picked up by the likes of the International Labour Organization and the United States to refer to helping carbon-dependent communities and workers cope with the impacts of climate change through decent work that 'leaves no one behind.'
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Bangladesh is certainly a country in transition, Akter said, but whether it'll be one that's 'just' is another matter entirely. When the autocratic Sheikh Hasina government was toppled last year, millions celebrated what they saw as a return to true democracy. The ensuing months, however, have seen the struggling interim government beset by criticisms from political opponents for delaying new general elections due to the slow pace of reform. As political uncertainty grows, so has working-class unrest as workers face 'multiple pains,' she added.
Then, just as the South Asian nation was making headway to stabilize an economy that has been continually thwarted by high inflation and low growth, the United States announced it would be withdrawing any foreign aid and placing an additional 35 percent tariff (slightly down from an original 'Liberation Day' figure of 37 percent) on all Bangladeshi imports. Akter's biggest concern is that this sum will be squeezed out of workers when there's nothing left to squeeze.
Matters are 'precarious' for world's second-largest exporter of clothing after China, said Mohiuddin Rubel, an additional managing director at Denim Expert, a jeans manufacturer in Chittagong, and former director at the Bangladesh Garment Manufacturers and Exporters Association, the trade group better known as the BGMEA, stopping just short of using the term 'bleak.'
Already, the gutting of the U.S. Agency for International Development's programs has caused employment loss and weakened many of the support systems that Bangladesh's 4.1 million garment workers relied on for rights training, legal representation or access to emergency funds. If the White House's so-called 'reciprocal' tariff goes through on Aug. 1, it could raise duties for Bangladesh-made garments from an average of 15.5 percent to roughly 50 percent, posing an 'existential threat' to a sector that accounts for nearly 85 percent of the country's exports. In 2024, the United States imported roughly $7.4 billion in apparel from Bangladesh.
While there is still the possibility of further negotiations—Bangladesh has promised to buy more U.S. cotton, wheat and oil if it'll help close the $6.2 billion trade deficit—some experts believe that the rate will not go below 25 percent even in a best-case scenario. This could prompt brands to shift their orders to cheaper geographies, decreasing Bangladesh's volume of exports.
'This dramatic increase renders Bangladeshi garments significantly less competitive in the crucial U.S. market compared to rivals like Vietnam, potentially leading to order cancellations and massive job losses,' Rubel said. 'The industry is actively seeking diplomatic solutions to mitigate these tariffs.'
Already, manufacturers operating on razor-thin margins have been asked by brands to absorb some, if not all, or the 'universal' 10 percent tariffs, he said. Small to medium-sized factories, in particular, will not be able to bear any further costs without being forced to sell their goods at a price below that of compliant production. But a just transition, Rubel added, hinges on the industry's ability to navigate its economic pressures while investing in renewable energy, green technologies, reskilling its workforce and ensuring worker protections in a nation where fossil-fuel use is still deeply entrenched and the unionization rate is only 5 to 7 percent.
'There's a notable absence of a clear, integrated policy framework that systematically combines climate action with labor rights and social protection,' he admitted. 'This often results in fragmented, ad-hoc initiatives rather than a coherent transition strategy. Ministries dealing with energy, labor and finance also frequently operate in silos, hindering effective inter-ministerial coordination and delaying the implementation of sustainable policies.'
It doesn't help that the effects of a warming planet are becoming increasingly palpable in Bangladesh, where heat waves are becoming more frequent and intense and the risk of flooding is anticipated to grow. A pair of 2023 studies by Cornell University ILR School's Global Labor Institute estimated that the capital of Dhaka will experience nearly 65 days that exceed a wet-bulb temperature of 30.5 degrees Celsius (86.9 degrees Fahrenheit)—enough to trigger moderate symptoms of heat stress and diminish productivity—in 2030 and more than 104 in 2050, a 63 percent uptick from 2004-2014 levels. A projected 36.9 percent of Dhaka's population will be at risk of riverine flooding in 2030 and 37.1 percent in 2050.
All these, said Jason Judd, the institute's executive director, 'conservative' calculations. And with temperatures hitting 43.8 degrees Celsius (110.8 degrees Fahrenheit) in some of Bangladesh's northern and southern districts last year, garment workers are becoming more vulnerable to exhaustion, nausea, fainting, heatstroke and possibly death—that is, if a catastrophic flash flood doesn't upend their lives first.
'When it comes to the other side of transition—adaptation—the need there is also clear; that's what we've been arguing with our analyses,' Judd said. 'The work we're going to do next is on how heat is showing up in workers' lives, both in the workplace and at home. We're enlisting brands, suppliers, workers' organizations and researchers to start running the numbers on these heat interventions for factories and homes. We want to see what's needed in terms of investment and what the return on investment would be on productivity bounce-back.'
Social versus environmental impacts
The timing couldn't be more apt: Sarah Krasley, founder of Shimmy Technologies, an AI-powered, mobile-based learning and job-matching platform that helps upskill workers in countries like Bangladesh, joined the Global Labor Institute this month as a visiting fellow to study what happens at the intersection of automation and climate adaption in the labor market—apparel production especially. Shimmy itself was hurt by USAID cuts, which required some 'tough calls,' including the closure of its physical offices.
'We have been navigating a period of realignment for the last few months,' Krasley said. 'But the mission that drives us hasn't changed, and with all the movement in labor markets, neither has the need for the work. Automation and reskilling pathways are critical components of just transition strategies.'
Reskilling is the key word. Automation that promotes efficiency, optimizes resource use and reduces waste—all things that can spur decarbonization efforts—can be a double-edged sword if the character of the workforce doesn't change along with its adoption, said AKM Ashraf Uddin, executive director of the Bangladesh Labour Foundation, a labor rights nonprofit. A recent study the organization conducted found that 30 percent of workers have lost their jobs because of new technologies that aren't accompanied by worker engagement and training opportunities.
Another survey spotted a minor but growing trend of women leaving their factory jobs for home-based ones because they could not cope with the extreme heat of their industrial workplaces, many of which are old, stuffy and ill-equipped for long bouts of extreme heat. Their ranks in the less visible parts of the supply chain will likely swell as more people from across Bangladesh are forced to move to cities like Dhaka because of climate-related displacements such as flooding, tropical cyclones and droughts.
'Where are they going? They are going to the informal sectors because they have no skills,' Uddin said. 'And then they won't have social protections or unemployment benefits. My concern is that policymakers aren't thinking of all this. We need a national just transition roadmap for all different sectors, not just readymade garments. This is quite a critical time.'
And it's not just the government that should be held responsible. A general consensus is that Western buyers that have prospered from Bangladesh's back-breaking labor for the past several decades need to step up, beginning with fair prices and fair commitments. Despite the country housing 230 garment factories certified under the Leadership in Energy and Environmental Design program—more than any other in the world—these green facilities don't receive green premiums, making it difficult for suppliers that have made strides to reduce their carbon emissions to also invest in their employees, as a Business & Human Rights Resource Centre report pointed out last month. What's needed, it said, is a 'holistic' approach to factory 'greening' that includes freedom of association, better compensation and stronger job security so workers don't resort to paying out of pocket for fans and other quality-of-life measures with their already-meager wages—another topic of persistent contention.
'So as technological fixes to the climate emergency and decarbonization move into workplaces, how do we make sure that it's not just international brands benefiting, but that workers feel like their work and lives are more thrivable, more bearable,' said Natalie Swan, the organization's labor rights program manager. 'And how do we make sure that it's an opportunity to upskill the workforce, increase decent work, rather than further the race to the bottom?'
Even fashion's most progressive brands have a long way to go, Swan said. The report found that of the seven companies with the most ambitious climate goals, just one—Zara owner Inditex—has a public climate transition plan that mentions workers. Plus, not a single one has laid out a stand-alone just transition policy.
'I think that brands are essentially saying, 'Well, we have a suite of human rights policies and they are fit for purpose,'' she said. 'Our research has proved that they are not fit for purpose to meet the new challenges of the industry. Health and safety issues have direct human rights implications, have direct production implications. And we have seen that brands' policies are completely siloed when it comes to talking about social and environmental impacts separately. That is not the world that we're living in. We're seeing that brands are not meeting the moment.'
Or paying for it, either. H&M Foundation, the philanthropic organization belonging to H&M Group's founding family, is a rare organization that's ponying up. Last month, it pledged 9 million euros, or $10.5 million, to be divvied up over three years, to 'scale a just transition' in Bangladesh's apparel sector through a 'collective impact initiative' it created called Oporajita, which partners with local grassroots groups to center women as 'key agents of change in a future-resilient, low-carbon RMG industry' through skills, gender-sensitive and entrepreneurship training. Phase 2 of this, H&M Foundation said, will bring together factory managers and workers to co-create tools and guidance on climate adaptation and heat stress management, including risk assessments and hydration support.
'We're going deeper—embedding climate adaptation, worker-led governance, and systemic advocacy into the heart of the program,' said Charlotte Brunnström, H&M Foundation's strategy lead. 'The initiative is rooted in the belief that women garment workers—who are among the most vulnerable to climate and economic shocks—must be at the center of any meaningful transition. This isn't a short-term project. It's a commitment to shift what's considered 'normal' in the industry by demonstrating that dignity and decarbonization can go hand in hand.'
Oporajita's evolution was informed by a 'just climate transitions in Bangladesh' report that H&M Foundation and the C&A-funded Laudes Foundation commissioned earlier this year. The program, Brunnström said, is a 'direct response' to the report's call for integrated 'justice-centered' climate action that embeds worker agency in governance and advocates for policy changes.
Future-proofing an industry
The way Sujata Rathi, director of nonprofit consulting firm FSG and an author of the report, sees it, there are a slew of possible futures for Bangladesh. The best one, 'Green Forest,' involves a world where sustainable fashion is the norm; the country's garment sector has embraced low-carbon processes, climate-resilient practices and accountability to workers; and the development of multiple other sectors has led to a low youth unemployment rate, high wages and respectable working conditions. The least ideal, 'Hot Desert,' envisions a timeline where global apparel markets do not transition, yet Bangladesh is left behind because of high costs and supply chain disruptions that result in mass unemployment.
Where the country lands on the axes of global demand versus competitiveness by the close of the decade depends, in part, on how it responds to developments in the European Union, still its largest single market with nearly $20 billion in apparel exports in 2024. As of now, all trajectories are still possible.
'Europe is already seeing regulatory changes that are pushing for a lower carbon footprint, even for imported materials,' Rathi said. 'If Bangladesh is able to keep up with these regulatory requirements and start producing products at a lower carbon footprint, there is a huge opportunity for it. So the earlier Bangladesh is able to start making these investments, the better position it will be to be able to stay competitive in the market and maybe even gain share from other countries.'
Climate change isn't just a human issue but an economic risk as well, she said. Flooding and extreme heat could prompt a rise in absenteeism if people aren't able to make it to work because of impassable roads, illness or the anticipation thereof. Production lines could shut down, resulting in lost earnings for everyone involved. Yet heat guidance for the industry remains vague or nonexistent. The fact that heat stress is an occupational safety and health issue—not to mention a make-or-break business case—hasn't quite floated to the top of mind for most fashion brands, Rathi said. Even simple fixes such as more frequent water breaks can improve worker efficiency, she added.
'If you look at what's happening in terms of climate change adaptation, there's a lot of activity happening in Bangladesh, but there's a gap in terms of what needs to happen in the factory to ensure that workers continue to stay competitive,' she said. 'A lot of initiatives talk about improving workers' lives and livelihoods, but very few of them actually say, 'I'm consulting with workers' or 'I'm including workers in these decision-making bodies where they actually have a voice and a say in the decision-making.' That's an important piece to think about.'
The question of who foots the bill for a just transition is a question Miran Ali, managing director of the Dhaka manufacturer Bitopi Group and a former vice president of the BGMEA, has been grappling with for some time. The Apparel Impact Institute, a multi-stakeholder organization that identifies and funds low-carbon innovations, estimates that Bangladesh needs a $6.6 billion investment to cut emissions in half by 2030, yet only $1.8 billion is currently available or anticipated, leaving a $4.8 billion shortfall.
It was Ali's discussions with other suppliers, which then escalated into larger dialogues with national manufacturing trade associations, that culminated in June with the founding of the Apparel and Textile Transformation Initiative, or ATTI. Its goal: to take the talk of 'collective action' around sustainability and turn it into more than idle prattle that generates only the false appearance of progress. Ali will serve on ATTI's global council as an interlocutor for Bangladesh, which has signed up alongside Turkey to pilot what is being described as a 'three-phase concept': assessment, solutions design and implementation.
'The buyers need to start coming to the table, and they can't just keep on saying, 'Well, I want this and that and zero this and zero that,' and not be around when we need them,' he said. 'We don't deny that brands are also interested in sustainability and all of that—that is a given. What is a fact, however, is that brands are not on the same page themselves, and they have the same suppliers. You must have the tip of the spear, a group of innovative, forward-looking brands and their suppliers who will set the trend for everybody else. ATTI will help do that.'
Ali didn't want to talk about U.S. tariffs, which he sees as a 'moving target.' He said that Bangladesh is open for business, open for discussion and open to negotiate. It is, however, not a 'servile nation.'
'We want whatever we do with the U.S. to be sustainable and that it will not affect our very important relationships with the U.K., the European Union, Japan, China, to begin with,' Ali said. 'So, yes, Bangladesh needs a deal, but it has to be a good deal, otherwise it would not be worth it.'
And if suppliers are forced by their buyers to bear the brunt of the tariffs when it comes down to it, decarbonization is bound to fall by the wayside. In the end, it comes down to simple math. It's going to be like a Covid-19 pandemic redux in some ways, said Vidhura Ralapanawe, executive vice president at Epic Group, a garment manufacturer with four hubs in Bangladesh.
'We have to look at this climate investment in the context of large economic issues for the country on one side and for the fashion industry on the other side,' he said. 'I think the real problem is that we really don't know how the customers are going to react. I think on the business side, the investments will slow down, for sure. From a national point of view, nobody's going to be thinking about energy transition because they are just trying to figure out something much more basic, which is employment for the masses and the overall economy.'
But until suppliers and buyers are on equitable footing, there can be no 'transition,' Ralapanawe said. 'My point on that is that we are struggling to do what the brands expect us to do, which is only to talk about decarbonization and not about adaptation, even for heat stress. But it has to happen. My question is, how bad are the heat waves going to have to be?'
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