US tariffs on Bangladesh threaten decades of economic and social progress

Bangladesh’s ready-made garment industry is an engine of economic growth

Earlier this week, President Trump imposed a 37% tariff on Bangladesh’s garment exports to the USA. Bangladesh’s ready-made garments industry is a cornerstone of its economy – over 80% of national export earnings come from apparel, which employs more than four million people and contributes around 10% of GDP. About 60% of garment workers are women​, meaning that female economic empowerment is tightly linked to the fortunes of the garment industry. Around 15% of all Bangladeshi women aged 16–30 work in garment factories​, a big share for a country where less than half of working-age women participate in the labour market. The rise of garment exports over the last four decades has provided millions of young women with formal jobs, income, and independence. This industrial boom coincided with remarkable social progress: fertility fell from about 6 children per woman in the 1980s to around 2 by 2020, and the average female marriage age rose from 14.6 to 17 years over a similar period​. The garment sector is widely seen as a key driver of these gains​ by expanding opportunities for women outside the home. Of course, this picture of social progress is not altogether positive: the ready-made garment industry remains characterised by low wages (the minimum monthly wage is around $115) and poor working conditions.

Against this backdrop, a sudden trade shock to the garment industry (on top of the existing threat to female employment by automation) is likely to be devastating for Bangladesh’s economy and for the welfare of women and girls.

Jobs in nearby garment factories boosted educational and economic opportunities for girls

Rigorous evidence confirms that the availability of proximate manufacturing jobs can improve women’s life prospects. Heath and Mobarak (2015) study the ready-made garment industry’s explosive growth to isolate its impact on female outcomes. They compared villages near new garment factories to similar villages without factories. Heath and Mobarak’s findings are striking: girls exposed to garment jobs married later and had children later than those in other villages​. Why did this happen?

One mechanism is through education. Heath and Mobarak show that factories increased the returns to schooling for girls. Young girls (age 5–9) in factory-proximate villages were more likely to stay in school, since better-paying sewing jobs are awarded to workers with better cognitive skills. Meanwhile, adolescent girls gained the option of wage work: older girls (in their teens and early 20s) were more likely to be employed outside the home if a factory was nearby​. Together these effects led families to invest in girls’ education and defer marriage and childbearing.

Heath and Mobarak find that in a typical factory-adjacent community, girls attain about 1.5 extra years of schooling relative to their brothers, a 50% increase in female education compared to areas without factories​. In short, the availability of jobs in nearby garment factories created a powerful incentive for girls’ schooling and formal work, which directly translated into later marriages and fewer early pregnancies​. This landmark study is as relevant today as it was ten years ago, underscoring how export-led manufacturing has empowered Bangladeshi women. 

The link between economic opportunities and marriage age is further illustrated by recent experimental evidence by Buchmann et al. (2023). They evaluated interventions to reduce child marriage in Bangladesh, where child marriage remains prevalent (nearly 59% of women now 20–24 were married before 18). They found that offering financial incentives to adolescent girls—in this case, small conditional grants for staying unmarried—led to a 19% reduction in underage marriage. And, while cross-country evidence is mixed, studies from beyond Bangladesh underscore the impact that trade can have on female economic empowerment. In Mexico, for example, industries benefiting from tariff cuts under NAFTA saw more women working and earning higher wages. 

The broader insight here is that economic prospects are entwined with key welfare outcomes for adolescent girls. When girls have something to gain from waiting (be it a stipend or a good job), families are more likely to postpone marriage and invest in more years of education.

But, when economic opportunities for women and girls vanish, gender equality reverses

When economic incentives are removed, the risk is that child marriage and school dropout will rise and girls education will decline. During the COVID-19 shock, for example, Bangladesh saw a worrying backslide: school closures and economic hardship from disruptions to the garment industry contributed to an estimated 13% surge in child marriage. What we saw during the pandemic foreshadows how a severe economic shock can undermine progress on girls’ education and empowerment.

The short-run impacts of US tariffs on Bangladesh are likely to be severe 

Two days ago, the USA—Bangladesh’s single largest export market—imposed a 37% tariff on Bangladeshi garment exports​. Such a steep tariff threatens to drastically cut garment orders from US buyers. In the short run, the impact will fall disproportionately on women: factories facing order cancellations will lay off workers, the majority of whom are female. Thousands of young women could lose their jobs and incomes almost immediately​, especially if foreign retailers shift sourcing to countries less affected by US tariffs. 

Household incomes in poor communities will drop, straining families that depended on daughters’ wages. Families under financial stress may pull older girls out of school or marry them off earlier as a coping strategy. With diminished prospects of factory employment, the perceived returns to girls’ education could fall, leading to higher dropout rates among adolescent girls. In the immediate aftermath of the tariff shock we might expect:

• Rising unemployment and income loss: A scramble as laid-off garment workers try to find alternative work, often in lower-paying informal jobs or by returning to rural villages.
• School dropout rises: Families facing hardship may no longer afford schooling for teenage girls who may have otherwise stayed in school longer to secure better jobs in a factory.
• Increased risk of child marriage: Economic desperation and fewer job prospects for young women can push parents to arrange marriages earlier, reversing the hard-won declines in underage marriage​.

In the long-term, Bangladesh’s hard-won gains in gender equality could stall or reverse

If the 37% tariff remains, the long-run implications could be even more profound. A prolonged export contraction would make one of the main pathways for women’s empowerment in Bangladesh precarious. Factories will downsize or shut, leaving a generation of girls and boys with fewer formal employment opportunities. All the gains that were at least partly fueled by the growth in garment exports are at risk.

Over time, a shrinking garment sector could lower female labour force participation and reduce women’s bargaining power both at home and in society. The loss of independent income for women often translates into diminished decision-making agency and potentially a return to more traditional gender roles. In development terms, the tariff shock risks eroding achievements across several fronts, from girls’ schooling and delayed marriage to female employment rates and autonomy.

Trade policy can profoundly shape social outcomes. Bangladesh’s experience shows that industrial export growth and gender progress have been intertwined: when trade flourished, so did women’s advancement. A major trade shock now threatens to set back that progress. Moving forward, policymakers and development partners should recognise that the impact of the shock will disproportionately affect women. Emergency responses, such as cash transfers or retraining programmes for displaced workers, could help blunt the shock in the short term. 

Bangladesh’s garment-led empowerment of women has been a rare success story in South Asia. Preserving and expanding those hard-won gains in the context of the new tariffs will be challenging and will require careful navigation of trade policy so that the economic opportunities fueling women’s progress are not eradicated.

References

Gaurav Nayyar and Siddharth Sharma (31 August 2022), “Shifting Gears to Propel Bangladesh’s Growth Engine”.

Heath, R and A Mushfiq Mobarak (2015), “Manufacturing growth and the lives of Bangladeshi women”, VoxDev. 

Dina M. Siddiqi (25 March 2025), “What’s Happening in Bangladesh’s Garment Industry?”, Economics Observatory. 

Heath, R, and A M Mobarak (2015), “Manufacturing growth and the lives of Bangladeshi women,” Journal of Development Economics, 115: 1–15. https://www.sciencedirect.com/science/article/abs/pii/S0304387815000085 

Bossavie, L, Y Cho and R Heath (2021), “The effect of international scrutiny on manufacturing workers: Evidence from the Rana Plaza collapse”, VoxDev Article

Matsuura, A. and Teng, C. (2020), "Understanding the Gender Composition and Experience of Ready-Made Garment (RMG) Workers in Bangladesh", International Labour Organization. 

Jahan, N (2024), “Boosting women’s labour force participation: Opportunities and challenges”, VoxDev Article.

World Bank (Accessed April 2025), “Fertility rate, total (births per woman) – Bangladesh”, https://data.worldbank.org/indicator/SP.DYN.TFRT.IN?locations=BD

Buchmann, N, E Field, R Glennerster, S Nazneen and S Rasul (2023), “A signal to end child marriage: Theory and experimental evidence from Bangladesh”, American Economic Review 113(1): 402–439, https://www.aeaweb.org/articles/pdf/doi/10.1257/aer.20220720

Sheldrick, A and R Sen (3 April 2025), “Trump tariff shock stings Bangladesh, Sri Lanka; garment giants may help India”, Reuters.

Juhn, C, G Ujhelyi, and C Villegas-Sanchez (2014), “Men, women, and machines: How trade impacts gender inequality,” Journal of Development Economics, 106: 179–193.

Heath, R, A Bernhardt, G Borker, A Fitzpatrick, A Keats, M McKelway, A Menzel, T Molina, G Sharma, “Female Labour Force Participation” VoxDevLit, 11(1), February 2024