- Apparel exports to take the worst hit
- Global markets tumble following sweeping tariff on imports
Sri Lanka must negotiate with the US on the tariff that it has slapped on our exports which is unfair and would make exports to the US uncompetitive said exporters reacting to the reciprocal tariff imposed on Sri Lankan exports.
“The Government should negotiate with the Trump administration on the tariff imposed on our exports which is very unfair as there is no uniformity in the tariffs when considering the different tariff rates fixed on each country,” said, former president, National Chamber of Exporters, Jayantha Karunaratne.
Exporters also proposed that Sri Lanka should reciprocally fix the import and export tariff to the US at 10 percent. However, trade experts said this is not viable as it would affect trade with other countries which too would demand for such a mechanism.
However, apparel which is one of the major export commodities to the US will be the most affected sector in the export basket while tea and other products to the US too will be badly affected.
According to exporters, already certain buyers from the US have requested a 44 percent discount on tea prices from Sri Lanka which is again not viable given the high cost of production in Sri Lanka.
Sri Lanka’s apparel industry expressing its strong opposition to the Reciprocal Tariff policy of the U.S regime said the new tariffs proposed could significantly disrupt the country’s largest export sector and put thousands of jobs at risk.
Following an announcement by U.S. President Donald Trump on April 2, a 10% baseline tariff on all imports will take effect from April 5, increasing to a 44% “reciprocal” tariff on Sri Lankan exports, starting April 9.
“This tariff level is extremely relative to our regional competitors,” said Secretary General of the Joint Apparel Association Forum (JAAF), Yohan Lawrence, adding “Sri Lanka could very quickly see its share of US business move to countries with lower tariffs than Sri Lanka has”.
The United States is Sri Lanka’s largest single-country apparel market, accounting for over 40% of the sector’s total exports, which exceeded USD 5.5 billion in 2023.
“With tariffs coming into effect almost immediately, the impact will be swift and severe. Potentially, we could see the bulk of our U.S. business migrate to competitor markets. This volume of business simply cannot be replaced through other markets,” he said.
The Government has already initiated consultations with the industry and other stakeholders to determine an appropriate course of action.
“We are very appreciative of the immediate action taken by the Government to discuss this situation and are working closely with the authorities to see how best we could address the concerns raised by the US Government, whilst staying within the limitations of Sri Lanka’s ongoing IMF program,” said Lawrence.
Despite this challenge, the apparel sector remains committed to transparency, ethical production and sustainable value creation.
“Our focus now is on engagement, agility and ensuring Sri Lanka remains a trusted sourcing destination. “However, this situation is serious, and it must be addressed as a matter of national urgency,” he said.
Meanwhile, President Anura Kumara Dissanayake has appointed a committee to make recommendations to the Government on the new US tariff system.
The Ceylon Chamber of Commerce expresses deep concern over the imposition of a 44% tariff on Sri Lankan exports to the United States (US). With the US accounting for approximately USD 3 billion in exports and 25% of Sri Lanka’s total merchandise export, this development poses a significant challenge to the country’s trade and economic stability.
Broader global trade disruptions could slow economic growth, affecting overall demand in key export markets such as the US and the EU.
A spokesman for the Chamber said, “We appreciate the President setting up a committee to evaluate the impact of the US tariffs and provide solutions to mitigate potential risks to the export sector. Since we are halfway through the IMF Extended Fund Facility program and navigating a tight fiscal space, it is vital that Sri Lanka is able to negotiate down from the high tariff band. It is an opportune moment for the Government to relook at its tariff structure and implement measures that will improve trade facilitation and improve the ease of doing business.
“We call on all stakeholders to collaborate in ensuring that Sri Lanka’s trade interests are safeguarded, while actively pursuing diplomatic and policy-driven solutions to sustain and strengthen its export sector,” he said.
Among the key export items, apparel exports will be the most negatively impacted, as larger apparel exporting nations such as Bangladesh (37% tariff), India (26%) and the Philippines (17%) face lower tariffs compared to Sri Lanka.
Four Sri Lankan listed companies are likely to be hit by U.S. President Donald Trump’s reciprocal tariffs because of their exposure to the US export market, according to capital market analysts.
The reciprocal tariff rate on Sri Lanka at 44% was the sixth highest imposed in the sweeping tariff measures announced to be in effect from April 9.
Sri Lanka is among the list of countries that have been slapped with high tariffs by President Trump.
The world has reacted to the tariff policy of the Trump administration which is likely to result in a global trade war.
The European Commission chief vowed Europe would take a unified approach and warned that the European Union – which will be subject to a 20% tariff – is preparing countermeasures in case negotiations fail.
Prime Minister of Italy Giorgia Meloni, a Trump ally, said the decision was “wrong” but that she would work towards a deal with the US to “prevent a trade war”.
Taiwan, which is set to face a 32% tariff for exports to the US, called the move “highly unreasonable”..
South Korean acting President Han Duck-soo said the global trade war “has become a reality” and his Government would be looking at ways to “overcome the trade crisis” after the East Asian country was hit with a 25% tax rate.
Japan said its 24% levy was “extremely regrettable” and could violate World Trade Organization and US-Japan agreements, while Thailand said it would negotiate its 36% tariff.
Leaders from countries subject to the 10% baseline rate have also reacted to Trump’s measures, with Australia’s Anthony Albanese saying Americans would end up paying the biggest price for what he called “unjustified tariffs”.
Asian stock markets and US futures fell sharply on Thursday following US President Donald Trump’s announcement of substantial tariff increases on imports to the US.
