Sri Lanka’s export sector is grappling with a significant challenge following the United States’ decision to impose a 44% reciprocal tariff on Sri Lankan goods. This steep tariff threatens the country’s trade with the U.S., particularly in the apparel industry, which serves as a cornerstone of Sri Lanka’s economy.

Tea and Other Exports Also Under Threat

The repercussions extend beyond apparel, with tea exports at risk due to increased costs that may reduce Sri Lanka’s competitiveness against major producers like India, Kenya, and China. Other key export segments, including spices, seafood, and coconut-based products, are also likely to face price pressures, making it difficult for Sri Lankan exporters to sustain their foothold in the U.S. market.

Given that the United States is a major buyer of Sri Lankan goods, this move raises concerns about trade competitiveness, long-term sustainability, and economic stability. The question now is: how will this tariff impact Sri Lanka’s export-driven industries, particularly apparel, and what strategies can be employed to counteract the effects?

A Major Blow to the Apparel Sector – Sri Lanka’s Leading Foreign Exchange Earner

Ambassador Kana Kananathan, former High Commissioner to Kenya, has warned that this development could severely impact the apparel sector, which accounts for nearly 40% of Sri Lanka’s total exports. With U.S. buyers contributing approximately $3.3 billion annually, the apparel trade constitutes a crucial revenue stream for the nation.

A 44% tariff would substantially raise the cost of Sri Lankan apparel, making it less competitive compared to manufacturers in Bangladesh, Vietnam, Cambodia, and India. This could lead to a significant drop in orders from American buyers, posing a serious threat to the industry’s growth and employment rates.

Navigating the Challenge: Government and Industry Response

While immediate government intervention is necessary to mitigate these effects, businesses must also take proactive measures. Innovation, market diversification, and strengthening supply chain resilience will be essential strategies for overcoming these trade barriers. With the right approach, Sri Lanka can navigate this challenge and position itself more robustly in the global marketplace.

Ambassador Kananathan also suggested that exporters explore the ‘1/3 Cost-Sharing Model’ as a potential solution. Under this approach:

=Sri Lankan Manufacturers accept a partial reduction in profit margins, ensuring their products remain competitively priced.

=U.S. Retailers and Brands agree to absorb a portion of the tariff, recognizing the value of maintaining a reliable Sri Lankan supply chain.

=Raw Material Suppliers provide pricing flexibility, such as offering discounts or extending credit terms, to help offset cost increases.

By adopting these strategic adjustments, Sri Lanka’s export industry can mitigate the immediate impact of the tariff while laying the foundation for long-term trade resilience.

( Ambassador Kananathan was Sri Lanka”s former High Commissioner to Kenya and with concurrent accreditation to 23 African countries as well as Sri Lanka’s Permanent representative to UNEP and UN Habitat)

Three Sinha Industries Pvt. Ltd. has been recognised with the Award of Excellence at the Sri Lanka Institute of Architects (SLIA) Annual Product Awards, held recently in Colombo. The award was presented for the company’s high-quality, fire-resistant doors, which are made using locally sourced materials and designed to meet the highest safety standards. The award ceremony was held recently in Colombo, and Managing Director Manjula Ariyakumara accepted the award on behalf of the company, marking yet another milestone in Three Sinha’s journey of excellence.

From its establishment as a small-scale business, Three Sinha has grown into a trusted name in Sri Lanka’s construction industry. The company has built a strong reputation for its commitment to quality, innovation, and reliability, earning both local and international recognition. Over the years, it has received several certifications for maintaining top-tier quality standards. Three Sinha has also received many other local and international awards.

Three Sinha Industries offers a diverse range of products and services, including roller doors, shutters, and fire-resistant doors that provide enhanced safety and durability. The company also specialises in aluminum fabrications, sensor doors, and automatic barriers, ensuring a comprehensive suite of solutions for the construction sector. Embracing sustainability, Three Sinha has expanded into green energy solutions, offering three types of solar PV electricity systems: on-grid, off-grid, and hybrid. Additionally, its subsidiary, IKLO Industries, focuses on pre-fabricated and pre-engineered steel buildings, incorporating advanced technology to meet modern construction demands. IKLO has also ventured into the agricultural sector by introducing tractor trailers tailored for farming needs. Moreover, the company manufactures high-quality diesel tanks that meet the standards of both the Ceylon Petroleum Corporation and the Indian Oil Corporation.

Amana Takaful Life Insurance PLC has once again demonstrated its commitment to delivering unparalleled financial security and growth, delivering attractive returns for long-term policyholders for 2024. As a trusted long-term insurer, Amana Life provides policyholders with the best investment choices, ensuring they can build and secure their financial future with confidence.

This achievement is driven by the company’s diverse, risk-rated investment options, strategically allocated across fixed deposits, bank investments, equity markets, and gold funds. This structure allows policyholders to balance security and growth, selecting funds that align with their financial goals while adapting to market conditions. As the only life insurer in Sri Lanka offering such flexibility, Amana Life empowers customers to optimize their investments while maintaining long-term financial stability.

The review of Funds as of December 31, 2024, demonstrates exceptional returns across all investment avenues, reaffirming Amana Life’s position as the insurer of choice for those seeking the best investment opportunities. The Protected Multiple Fund (PMF), with a Fixed Deposit base of 90% of its fund value, demonstrated steady returns, despite Sri Lanka experiencing interest rate cuts regularly over the past 24 months. PMF produced returns of 18.1% for the said period on an annualized basis while the market rates for Fixed Deposits reached single digits towards the latter part of 2024.

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