Sri Lanka’s apparel exports rose 7.96 per cent in May 2026, driven by a 15.36 per cent jump in US shipments, highlighting its reliance on American demand.
However, the recovery faces a key test as the country seeks a trade deal before July 24 to avoid a proposed 12.5 per cent US tariff that could weaken its competitiveness against rival exporters.
Non-traditional markets also delivered encouraging gains, with shipments reportedly climbing 14.61 per cent to $70.67 million. However, performance elsewhere remained subdued. Exports to the United Kingdom inched up by just 0.87 per cent, while shipments to the European Union slipped marginally by 0.3 per cent to $121.35 million.
The export numbers highlight a growing reality: the sector’s recovery is becoming increasingly tied to demand from the United States. Although diversification efforts are showing encouraging signs, the US consumer continues to hold the key to the industry’s near-term fortunes, it seems. That dependence, however, comes with a significant challenge.
The industry is now racing against time to secure a favourable tariff arrangement before a proposed US trade measure comes into force on July 24. Under the current proposal, Sri Lankan apparel exports could face an additional 12.5 per cent tariff, compared with a proposed 10 per cent levy for several competing manufacturing countries. Such a gap, though seemingly small, could erode Sri Lanka’s price competitiveness in one of its most important export markets.
Recognising the stakes, the Joint Apparel Association Forum (JAAF) has reportedly stressed that sustaining the current momentum will depend on achieving a fair and competitive tariff outcome in Washington, even if industry leaders remained optimistic that with the right policy support, the second half of 2026 could prove substantially stronger than the first, transforming the recent rebound into sustained growth rather than a temporary upswing.
The Sri Lankan Government is also pushing for a breakthrough before the proposed tariff takes effect on July 24. The Ministry of Trade, Commerce, Food Security, and Co-operative Development has reportedly indicated that discussions with US counterparts were nearing completion, with hopes that a trade agreement can prevent the higher tariff from being imposed.
The urgency stems from a policy announced by the Office of the United States Trade Representative, which offers a lower 10 per cent additional tariff only to countries that have adopted or committed to forced labour import restrictions through reciprocal trade arrangements. Sri Lanka currently falls outside that category, leaving its apparel exports exposed to the higher 12.5 per cent rate unless an agreement is reached.
Against this backdrop, the outcome of tariff negotiations with Washington could prove crucial in determining whether the current rebound is merely a short-lived upswing or the beginning of a sustained new export cycle.
Fibre2Fashion News Desk (DR)
