Around 10% reduction on orders on US tariffs uncertainty
While tariff negotiations between Sri Lanka and the US are ongoing till the 90-day grace period expires on July 8, Sri Lanka’s apparel sector faces a 10 per cent reduction on orders placed. For some US brands, affordability is impacted and many are delaying purchases or trading down which has directly affected the manufacturers’ sales.
Last Monday The Sunday Times Business Club hosted an event titled ‘US Tariffs: Are we out of the woods?’ at the Tiki Bar of the Shangri-La Hotel in Colombo, the host hotel for the event. The two panellists at the event were MAS Holdings, CEO, Suren Fernando and KPMG, Advisory Head of Management Consulting, Partner, Kamaya Perera.
Mr. Fernando, in his capacity as a professional in the apparel sector, shared that the US economy is going through a slowdown with investment banks and rating agencies seeing a negative outlook. Some have predicted a 50 per cent chance of the US economy going into a recession. “The economic conditions faced by our US brands are not that positive. We see approximately a 10 per cent reduction in the volume of orders coming in, due to these conditions. In terms of pricing some customers are passing a part of the tariff increase to the consumer while some brands that are doing well, are taking that duty portion themselves. For some US brands their affordability is impacted. Research shows that 50-60 per cent of US consumers expect to spend less, and many are delaying purchases or trading down, which directly affects the manufacturers’ sales.”
He also mentioned that Sri Lanka has regained its economic strength and is now on a more stable and promising path. “The 44 per cent tariff imposed on exports to the US, is under negotiation as we speak. For now, till the end of the 90-day grace period, we face a 10 per cent base tariff increase and conversations with our brands and retailers are underway. Existing tariffs in the US could vary between 12-30 per cent depending on the HS code and specific product category.”
Sri Lanka exports goods worth more than US$ 3 billion, out of which $2 billion is apparel. “An additional 44 per cent tariff would make Sri Lanka uncompetitive. Tariffs imposed on any country, whether high or low, could have significant implications on the global economy, which is currently facing many challenges,” added Mr. Fernando.
Ms. Perera highlighted that, out of Sri Lanka’s exports globally, 24 per cent goes to the US. Sri Lanka’s exports value globally as of 2024 is $12.1 billion out of which $3 billion is to the US. On the top tier, 64 per cent of exports to the US is apparel, 10 per cent is rubber, gloves and tyres, 3.2 per cent is coconut related products, and the rest is a diverse mix of industrial goods. “This is how dependent we are on the US economy. There is uncertainty in these US tariffs,” she noted.
Hitad.lk has you covered with quality used or brand new cars for sale that are budget friendly yet reliable! Now is the time to sell your old ride for something more attractive to today's modern automotive market demands. Browse through our selection of affordable options now on Hitad.lk before deciding on what will work best for you!