SL’s apparel exports fell 8% in 1stQ 2026-JAAF
View(s):Sri Lanka’s apparel exports fell by 8 per cent in the first quarter of 2026 compared to last year, but the data is revealing specific opportunities where targeted policy action could turn things around, according to the Joint Apparel Association Forum (JAAF).
The January’s 3 per cent decline deepened to 11 per cent in both February and March. While global demand has softened, the late February escalation of Middle East tensions will likely show its full impact in the coming months as supply chains adjust.
The sector is grappling with higher operating costs fuel, electricity are driving up operational costs by adding nearly US$3 million monthly to industry expenses. For manufacturers working on tight margins, particularly smaller players, this represents a genuine challenge that smart policy can address, JAAF said in a media release.
On energy for example, JAAF has consistently lobbied for meaningful reform of legislation to allow open access and power wheeling. This will ensure that the sector gets the maximum growth in renewable energy, reducing reliance on fossil fuels.
The US, which buys 40 per cent of Sri Lankan apparel, saw exports decline just under 8 per cent in Q1 slightly better than the overall performance. Consumer conditions are tightening with rising fuel prices and inflation approaching 4.8 per cent, alongside geopolitical uncertainties. But this creates an opening for value-focused products and strategic positioning.
On the trade policy front, there’s a need for immediate action. After the US Supreme Court ruling on reciprocal tariffs, a temporary 10 per cent duty under Section 122 was introduced in February for 150 days. This gives Sri Lanka a defined window to engage and advocate.
The Section 301 investigations by the USTR, covering 60 countries including Sri Lanka, present a chance to demonstrate strong labour standards enforcement. With public hearings ahead, Sri Lanka can build on its previous success in negotiating down tariffs from 44 per cent showing that proactive engagement delivers results, the release said.
While tariff refunds from the Supreme Court ruling are due to commence shortly, these will, almost always accrue to the US buyers who are the importers on record, rather than to the local garment manufacturers as shipments are primarily on either FCA or FOB terms., understanding this dynamic helps manufacturers negotiate better terms upfront and strengthens the case for government advocacy on their behalf.
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