• Sri Lanka's apparel industry faces a 30% tariff imposed by the US.
• The US accounts for about 40% of Sri Lanka's apparel exports.
• If unaddressed, the tariff could damage the garment sector, according to industry leaders.
• The tariff rate for Sri Lanka is higher than that for competitors like Vietnam.
• Discussions are ongoing in hopes of negotiating a lower tariff.

Sri Lanka's garment industry is facing significant challenges due to a 30% tariff imposed by the United States on imports from the island nation, as warned by the Joint Apparel Associations Forum (JAAF). The US takes approximately 40% of Sri Lanka's apparel exports, which generated $1.9 billion last year, making it the country's third-largest source of foreign exchange and employing 300,000 people, predominantly women, according to Reuters, South China Morning Post, and TRT World.

The tariff, notified in a letter from President Donald Trump to President Anura Kumara Dissanayake, is set to take effect from August 1. This rate is significantly higher than the 20% tariff faced by Sri Lanka’s competitor, Vietnam, leading to concerns that the Sri Lankan industry may struggle to compete effectively on international markets. Yohan Lawrence, representing the JAAF, emphasized that without a reduction in the tariff, "Sri Lanka is in trouble" as competitors receive more favorable treatment, as highlighted by Reuters, South China Morning Post, and TRT World.

Furthermore, while Bangladesh faces a 35% tariff, the situation for India's levy remains unclear. The Sri Lankan government's response has not been immediate; however, a news briefing has been scheduled to address these issues with officials including central bank governor Nanadalal Weerasinghe. The International Monetary Fund has recently affirmed that, despite significant risks associated with global trade policy shifts, Sri Lanka’s economic outlook remains positive, according to Reuters, South China Morning Post, and TRT World.