Trump tariffs and their effect on world trade and economy with particular reference to Sri Lanka – Part III

The textile and apparel sector holds outsised importance in Sri Lanka's economy. It accounts for approximately 40% of the country's total exports and directly employs around 350,000 workers, predominantly women from rural areas, for whom these jobs represent a crucial pathway out of poverty.

- BY M. U. M. ALI SABRY PRESIDENT'S COUNSEL

When indirect employment in supporting industries is included, the sector supports the livelihoods of over one million Sri Lankans.

The industry's development was initially facilitated through quotas assigned by the Multi-Fiber Agreement (1974-1994), which allocated specific export volumes to developing countries. When this agreement expired, Sri Lanka managed to maintain its position in global apparel supply chains by focusing on higher-value products, ethical manufacturing practices, and reliability. The country has positioned itself as a producer of quality garments, particularly lingerie, activewear, and swimwear for major global brands.

However, this success has created a structural dependency on continued access to markets in wealthy countries, particularly the United States. As the Secretary General of the Joint Apparel Association Forum, the main representative body for Sri Lanka's apparel and textile exporters, bluntly stated following the tariff announcement, "We have no alternate market that we can possibly target instead of the US."

This dependency is reinforced by the industry's integration into global supply chains dominated by U.S. brands and retailers. Many Sri Lankan factories operate on thin margins as contract manufacturers for these international companies, with limited ability to quickly pivot to new markets or product categories. The industry has also made significant investments in compliance with U.S. buyer requirements and sustainability certifications, creating path dependencies that make rapid adaptation to new market conditions extremely challenging.