The apparel industry in Sri Lanka continues to see a steady flow of orders, even as buyers urge suppliers to reduce prices due to mounting pressures in the US retail market from recently imposed tariffs—developments that could influence broader market trends.
Sri Lanka, along with several competitor nations, has been hit with increased US tariffs, currently set at 20 percent. However, industry experts expect more significant changes early next year as countries like Vietnam push for the removal of tariff stacking by the US.
Tariff stacking, which affects Sri Lanka and other global apparel exporters, involves applying multiple tariffs to a single imported product, thereby increasing the total duty payable. This means products such as cotton T-shirts and synthetic T-shirts face different tariffs that cumulatively raise the overall cost of apparel imports.
Buyers are reportedly seeking lower prices and requesting suppliers to share the burden of tariffs to sustain demand. Previously, tariffs on countries like Sri Lanka were at just 2 percent, but the recent increases are now impacting the US retail market.
As a result, retail prices have dropped by approximately 5–10 percent. Suppliers, however, indicate that to accommodate these reductions, they will negotiate for cheaper rates from fabric suppliers.
Despite these pressures, the industry is not experiencing a decline in orders. On the contrary, orders continue to flow in, and sources indicate that future demand is expected to remain steady. Currently, shipments are being sent to the US for the spring and summer seasons, while orders for the Fall are already being secured.
Industry observers noted that if the current conditions persist, there could be a gradual shift towards countries without Most Favoured Nation (MFN) status. Presently, MFN countries such as South American nations, Jordan, and Egypt face tariffs, while Mexico benefits from duty-free access.
According to cumulative figures for January–October 2024, exports to the US fell by 18.46 percent to US$1,300 million compared to the same period last year. The US accounts for 40.04 percent of Sri Lanka’s apparel exports in 2024.
