On 2 April, US President Donald Trump imposed a 44 percent tariff on Sri Lankan exports to the United States. With apparel comprising 64 percent of these exports—valued at nearly USD 1.8 billion in 2023—Sri Lanka’s apparel industry is likely to suffer the greatest impact.
The reciprocal tariffs imposed across all exporters to the US could potentially reduce overall US demand for apparel. Consequently, this analysis conducted using World Bank’s SMART partial equilibrium model, reveals that Sri Lanka’s apparel exports to the US may decline by approximately 20 percent (over USD 300 million). The model simulated the impact on US demand of an increase in the weighted average tariff for US apparel to 36 percent.
Note
These are preliminary estimates, and actual outcomes will may depend on other factors. Notably, Sri Lankan apparel may face a further loss in competitiveness, as the 44 percent tariff on its exports is markedly higher than those imposed on key competitors such as Bangladesh (37 percent) and India (26 percent).