Tariff Trap: How U.S. Protectionism Is Crippling Myanmar’s Garment Industry
SRIc Insights By
As Trump 2.0 intensifies his tariff war, Myanmar’s garment industry, already reeling from military rule and economic collapse, is emerging as one of the least expected but most vulnerable casualties.
Key Takeaways
Myanmar’s garment industry, once a low-cost export hope, collapses under U.S. tariffs, compounded by political instability and global supply chain fragility.
The Trump administration’s 2025 tariff hikes, including a 44% import tax on Myanmar goods, devastate export competitiveness and accelerate job losses.
Over 80% of the industry’s workforce is women, and the trade shock is worsening gender inequality, forcing thousands into precarity or migration.
As President Donald Trump returns to power, his administration has intensified its tariff policy, particularly targeting China with steep increases on a wide range of imports.
However, the ripple effects of this protectionist approach extend far beyond Beijing. Once seen as a potential beneficiary of the U.S.-China trade, Myanmar now finds itself caught in the crossfire. Once a growing center for low-cost manufacturing, Myanmar’s garment industry, dependent on Chinese raw materials, western markets, and foreign investment, is struggling to survive.
This article explores the unfolding “tariff trap” that is dismantling Myanmar’s garment industry, examining its wide-reaching impact on trade, jobs, human rights, economic stability, and the long-term future of one of the country’s most vital sectors.
Historical Context: U.S.-China Tariffs and Ripple Effects on Myanmar
To understand Myanmar’s current crisis, it is essential to look at the escalating trade tensions between the United States and China. Since 2018, the U.S. has imposed increasingly aggressive tariffs on Chinese goods to reduce trade deficits and protect domestic industries. These deficits stem from factors such as China’s currency manipulation, integrated global supply chains, and strong U.S. consumer demand. Under President Trump’s renewed administration in 2025, these measures intensified. On April 2, 2025, he announced a sweeping new tariff plan: a blanket 10% tariff on all imports and a 34% hike on Chinese goods, bringing the total tariff burden on some Chinese imports to 54%. Specific tariffs surged even higher in the following weeks, reaching 145% on select items.
A major blow came with revoking the de minimis rule, which had previously allowed low-value imports to enter the U.S. duty-free. This affected fast fashion platforms reliant on low-cost Asian manufacturing, further straining global supply chains.
Although a temporary tariff truce was reached in May 2025, offering brief relief, the disruption to global trade had already taken its toll. Myanmar—deeply embedded in supply chains reliant on Chinese raw materials and Western consumer demand—has been among the most brutal hit.
Myanmar’s Garment Industry Under Pressure
By 2023, Myanmar's garment industry comprised over 800 factories, with about two-thirds owned by foreign investors, mainly Chinese, Japanese, Korean, and Thai firms. Chinese investors account for over 60% of total sectoral investment, operating over 300 Cut-Make-Pack (CMP) facilities. This foreign-led expansion has sustained industry amid prolonged political and economic turmoil.
In 2024, Myanmar exported $473.12 million worth of goods to the U.S., with garment and apparel products making up more than $343 million, over 72% of total exports. But on April 2, 2025, the United States imposed a sweeping 44% tariff on all imports from Myanmar.
Although the U.S. is not Myanmar’s largest trading partner, the tariff makes its exports less competitive and threatens already limited export earnings in key sectors like garments. Along with the EU's suspension of trade preferences and falling garment orders, this tariff has severely hurt the industry. Moreover, the sector's continued reliance on the CMP model, which limits local value addition and tax contributions, raises further concerns about its long-term sustainability.
The timing of this shock could not be worse. Myanmar’s economy struggled in 2024 with slow growth, high inflation, and ongoing military rule. Since the 2021 coup, it has recorded the weakest economic performance in Southeast Asia. GDP grew by just 1% in the year ending March 2024, 10% below pre-pandemic levels.
Instability, conflict, and a sharp drop in foreign investment, from $2.5 billion in 2019 to $1.52 billion in 2023, have disrupted Myanmar’s economy, with FY2025 growth expected well below the pre-pandemic 6–7 % average. Recent shocks like a significant earthquake, combined with U.S. tariffs cutting off key markets, and the departure of international clothing brands such as Mango, Myanmar’s trade and economic outlook will likely worsen further.
Uneven Responses: How Governments Are Reacting to the Tariff Shock
In response to the U.S. tariff shock, governments across Asia have shown varying degrees of urgency, transparency, and effectiveness, reflecting their political environments and economic capacities.
Myanmar, facing a 44% tariff on its exports, is reportedly considering measures to address it. However, unlike other countries actively engaging in diplomacy, it has not publicly initiated formal talks with the U.S. for reduction or suspension. The de jure opposition, the National Unity Government (NUG) operating in exile, lacks international recognition and authority over trade policy, rendering it largely powerless. Meanwhile, the de facto State Administration Council, led by the military, has shown no interest in engaging diplomatically with the Trump administration. Myanmar Garment Manufacturers Association (MGMA) has warned that the tariff could be devastating, risking massive job losses, especially for women, and reversing years of progress on labor rights. While MGMA has appealed to U.S. officials to reconsider or reduce the tariff, citing economic harm and human suffering, these efforts lack strong government backing.
By contrast, Vietnam responded swiftly and strategically. Facing a 46% tariff over transshipment concerns, it secured a temporary cut to 10%, tightened customs enforcement, and began broader trade talks with the U.S.—a proactive move grounded in long-term planning.
China launched the most vigorous pushback. In response to the U.S. tariff of 34% under IEEPA (International Emergency Economic Powers Act), it imposed matching retaliatory tariffs, ultimately to 125%, alongside export restrictions on rare earths, expanded scrutiny of U.S. companies, and a formal complaint lodged with the WTO. After tough talks, China and the U.S. agreed to a 90-day pause starting mid-May 2025. During this time, they temporarily lowered tariffs from 34% to 10% and put some other trade restrictions on hold, but many tariffs and controls are still in effect as they continue negotiations.
Malaysia, as ASEAN chair, took a cautious but coordinated approach. It matched the U.S. with a 24% tariff but prioritized diplomacy, impact assessments, and a proposed U.S.-ASEAN summit to promote regional unity and trade stability.
How Tariffs Devastate Women in Myanmar’s Garment Industry
The recent 44% U.S. tariff hike on Myanmar’s garment exports is not just an economic blow; it’s a gendered crisis. As of early 2022, the garment industry employed around 500,000 workers, over 80% of whom are women, primarily aged 16 to 27. For many, garment work is one of the few available sources of stable income and economic mobility in an economy marked by limited opportunities.
As U.S. orders decline due to the tariff, factories are likely cutting production and delaying shipments. With little or no access to severance pay or social safety nets, dismissed workers are often pushed into informal or precarious jobs, or fall deeper into poverty. This economic shock comes from worsening conditions since the 2021 coup, which eroded labor protections and fueled workplace harassment and inflation. Between 2014 and 2024, women’s labor force participation fell significantly, from 51.1% to 41.8%—a stark indicator of declining opportunities for women. In a country where most jobs are informal and insecure, the female unemployment rate reached 3.686% in 2024, reflecting the deepening vulnerability of women in Myanmar’s workforce.
A 2025 UNDP study found that average garment workers earn under $100 per month, with only 7% earning more. Despite such low wages, most women contribute over 75% of their household income, and nearly 90% send remittances if living away from family. Still, over half reported reducing food intake to cope with rising costs, and more than a fifth said their earnings were insufficient to meet basic family needs.
Despite the hardships, around 70% of workers say they would stay in Myanmar if wages and conditions improved. However, as hope fades, 21% of surveyed workers are now preparing to leave the country for better opportunities. This growing out-migration reflects the deepening desperation among young women who no longer see a future in an industry that once offered them stability.
Conclusion
In sum, the stated goal of the U.S. tariff hikes, narrowing the trade deficit and diversifying supply chains, remains far from achieved. Instead, they could have driven up prices for American consumers, hurt U.S. importers, and disrupted global trade without closing the trade gap. The result is a lose-lose scenario.
Nowhere is this more painfully evident than in Myanmar’s garment industry, where the latest 44% tariff on U.S. imports is dismantling the livelihoods of hundreds of thousands of women in Myanmar and their families who depend on the garment industry to survive.
While the policy may appear economic, its repercussions are intensely social, compounding gender inequality, driving families into poverty, and accelerating the breakdown of already fragile communities. Without urgent international attention and a reconsideration of such punitive trade measures, the cost will not just be in lost exports, but in lost futures.
Windia Soe is a Research Fellow at the Sustainability Lab of the Shwetaungthagathu Reform Initiative Centre (SRIc). With over seven years of experience, she focuses on health and social behaviour change, working with international and local NGOs.
“Advocating Sustainability, Shaping Our Future”
Contact: sabaitimes@shwetaungthagathu.com