Challenges faced by Sri Lanka's apparel and textile industry in US market

SRI Lanka's apparel and textile industry has been the export powerhouse for several decades to date, contributing $ 5.05 billion in 2024, with a growth of nearly 5%, operating with the anticipation of elevating to $ 7 billion by 2030, according to industry data publicly available.

- By Tharanga Wijayasinghe and Chinthaka Abeysekera

Sri Lanka has positioned itself as a major ethical apparel sourcing hub, demonstrating the highest levels of social and environmental standards through the 'Garments without Guilt' initiative. Generations of industry experience and a strong push for research and development helped Sri Lankan manufacturers offer comprehensive end-to-end solutions with faster turnaround times. Both are highly valued in today's global markets, among consumers who rely on Sri Lanka to produce more technically advanced apparel products.

The apparel and textile industry fuels nearly 42% of Sri Lanka's total exports mainly focused on three main markets the USA, EU and the UK of which approximately 40% is consumed by the USA market alone, amounting to $ 2.02 billion in 2024.

Table 2 illustrates the dominance of Sri Lanka's apparel and textile exports to the US market by the top 10 products been apparel products from year 2020 till 2022.

Sri Lanka's over reliance on the USA market for its export industries is creating unprecedented challenges during a crucial period of economic recovery, from the recent tariff barriers placed by America, to the immediate effects of the US's involvement in the Middle Eastern war.

New set of tariffs for US's trading partners

The Trump administration introduced a new set of tariffs for the US's trading partners in April 2025, implementing the prevailing base tariff of 10% on most countries which came to effect from 5 April. Approximately 60 nations, including Sri Lanka, were identified as major offenders of bilateral trade, citing unfair trade practices and significant trade surpluses with the United States. Higher tariff rates were to be placed on these nations, but was halted on 10 April 2025 for a period of 90 days to make room for negotiations. This ended on 9 July 2025, with Sri Lanka negotiating the initially imposed 44% down to 30% and then to 20%, a figure comparable to the region's major competition.