Apparel orders to US steady, prices drop
The apparel industry in Sri Lanka is continuing to see steady flow of orders although buyers insist that suppliers reduce prices as the US retail market is facing the pressure of the imposition of the tariffs that inadvertently are likely to impact on market trends.
Sri Lanka along with its other competitor nations was slapped with increased tariffs from the US which is currently at 20 per cent. But the real change is hopefully expected early next year when most countries like Vietnam are pushing for the US to move out of tariff stacking.
Sri Lanka like the rest of its competitor nations in the global apparel industry have had to pay high tariffs as apparels face a number of tariffs on a single product. Stacking tariffs is the cumulative application of multiple tariffs to a single imported product, increasing the total duty owed.
This means that certain products like cotton T-shirts and synthetic T-shirts face different tariffs and these are all added to the overall tariffs imposed on apparel.
Buyers are said to be currently requesting for lower prices and sharing of the tariffs with the supplier in a bid to sustain the demand. Prior to the reciprocal tariffs imposed on countries like Sri Lanka and the rest, the tariffs were at 2 per cent but now this has started to hit the retail market.
This has led to prices dropping by about 5-10 per cent but suppliers point out that in order to do so they will also be ensuring the orders from the fabric suppliers will be obtained at cheaper rates.
The industry is however, not facing a drop in orders. On the contrary they continue to receive orders and it is observed that future orders are also likely to sustain, industry sources said.
At present while shipments are being made to the US for the spring and summer, orders are being obtained for the Fall. It was noted that if the current status should continue with no changes in the coming months then there could be a gradual shift towards countries with no Most Favoured Nation (MFN) status. At present countries like South America, Jordan and Egypt are faced with tariffs as MFN states while Mexico operates at duty free.
The January – October cumulative figures indicate that exports to the US dropped by 18.46 per cent to US$ 1,300 million compared to the same period last year. US accounts for 40.04 per cent of apparel exports from Sri Lanka in 2024.
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