- 30% tariff to erode export competitiveness
- Puts jobs at stake
- Risks seeing a migration of US buyers to lower-tariff countries
Exporters displeased over the 30% tariff imposed by the United States on all imports to the country from Sri Lanka, said such a steep hike in tariffs would jeopardise apparel exports and other commodities to the US which is a significant market for Sri Lanka.
US President Donald Trump announced the latest tariff for Sri Lanka last week after two rounds of discussions between Sri Lankan and US trade officials held since the sweeping tariffs were introduced on all trading partners with the US in April this year.
The Joint Apparel Association Forum (JAAF) said the 30% reciprocal tariff by the US, due to take effect from August 1, 2025, has raised significant concern within the apparel industry. As one of the country’s largest export earners, the sector relies heavily on access to the U.S. market, and such a steep increase threatens to erode competitiveness, particularly when compared to regional peers.
JAAF notes that Vietnam has already concluded negotiations and now faces a 20% tariff, while Bangladesh, though at 35%, has already begun negotiations with the US to secure a reduction.
India’s position remains under discussion, but early signals suggest it may receive a more favourable rate than Sri Lanka.In all likelihood Cambodia, another competitor with a tariff rate marginally higher than Sri Lanka will also be negotiating for a reduction.
Be as it may exporters including the JAAF which represents the interest of apparel exporters firmly believe that there could have been a much better deal struck had the authorities hearkened to the whistle-blowers who had cautioned an impending tariff hike from the US early this year after President Trump resumed his second tenure.
“If the 30% tariff stands, we risk seeing a migration of US buyers to lower-tariff countries,” JAAF warned. “We strongly urge the Government to continue active engagement with the US Trade Representative (USTR) to secure a better deal for Sri Lanka.”
Director, Timex Group, Anis A. Sattar said Sri Lanka will not be able to compete with Vietnam and Philippines whose tariffs are less than Sri Lanka.
“Our export competitiveness will drop drastically forcing buyers to look for alternative sources,” he said.
The Government while stating that Sri Lanka managed to receive the largest tariff reduction compared to certain other countries said it has laid out a strategy to navigate the latest US tariff.
However, while industry bodies and chambers commending the efforts taken by authorities to engage with the US they strongly urge further diplomatic engagements and negotiations with the US to reach a better deal that would secure jobs and the export industry.
JAFF notes that the reduction from 44 to 30% is a recognition of the good faith with which Sri Lanka has been having its dialogue with USTR and JAAF is encouraged by the Government’s comments today indicating that negotiations with USTR will continue with a sense of urgency ahead of the August 1 deadline when the 30% will become effective. JAAF further stressed that a diplomatic resolution is vital to safeguarding jobs, sustaining market share, and reinforcing Sri Lanka’s position as a trusted partner in global apparel supply chains.
The Ceylon Chamber of Commerce views the reduction in the tariff rate from 44% to 30% a constructive and important first step by the Government toward bringing Sri Lanka’s tariff structure for exports to the U.S. closer to that of regional competitors.
We encourage continued engagement with the U.S. administration to secure a further reduction by August 1, especially given that several regional peers are expected to benefit from even lower rates. Progress in achieving a further reduction will be critical to strengthening Sri Lanka’s position in this key market, maintaining buyer confidence, and supporting sustained trade growth over the long term.
The Ceylon Chamber said that it stands ready to support the Government’s efforts in this regard through constructive dialogue, industry feedback, and coordinated advocacy.
