Sri Lanka’s apparel and plantation sectors have expressed mixed reactions following the U.S. government’s decision to impose a 20 per cent tariff on goods imported from Sri Lanka. The revised tariff was officially announced on Friday (August 1) and will come into effect on August 7.
This rate marks a significant reduction from the initially proposed 44 per cent announced a few months ago. The rate was later lowered to 30 per cent, and following extensive virtual discussions—via Zoom—between Sri Lankan and U.S. trade officials, including a video conference between President Anura Kumara Dissanayake and the U.S. Trade Representative, the final rate was agreed at 20 per cent.
In response to the new development, The Sunday Times Business sought opinions from key figures in the affected sectors.
“It’s not easy,” noted the CEO of a leading garment manufacturing company. “If you take the current rate of taxation on the apparel industry, which averages around 20 per cent, this essentially doubles it. The new average tax would be close to 40 per cent.” He explained that apparel tariffs previously ranged from as low as 6 per cent to a high of 33 per cent.
Despite the increase, the CEO acknowledged that Sri Lanka now stands on equal footing with its regional peers in terms of tariff treatment. He added that local manufacturers would begin discussions with U.S. buyers to explore collaborative strategies going forward.
Commenting on the impact to the plantation sector, Dr. Roshan Rajadurai, spokesperson for the Planters’ Association, said that although the U.S. is not a major tea market—describing it as a “cold” tea market—the change would negatively affect exporters catering to this niche. However, he emphasized that a more pressing concern for the tea industry is the planned removal of the Simplified Value Added Tax (SVAT) scheme in October 2025, warning that this would have a “devastating impact” across the entire industry.
Meanwhile, the Exporters’ Association of Sri Lanka welcomed the revised tariff, praising the successful negotiations between the Sri Lankan and U.S. governments that led to the reduced rate.
The Joint Apparel Association Forum (JAAF) also expressed its appreciation for the outcome, applauding the efforts of the Sri Lankan government.
“We extend our sincere gratitude to President Anura Kumara Dissanayake for his leadership, and to the negotiating team led by Dr. Harshana Suriyapperuma, Secretary to the Treasury, for their pragmatic and sustained engagement since the initial tariff announcement in April. Their tireless efforts throughout this complex process have been instrumental in achieving a fair and competitive outcome for Sri Lankan exporters,” JAAF said in a statement.
