The World Bank warns that 20% US import tariffs on all freight from Sri Lanka – introduced on 7 August – will cut the country’s apparel exports by up to 12%, posing significant disruptions for global sportswear brands that rely on Sri Lanka as a sourcing base.
A new World Bank report warns that Sri Lanka’s ready-made garments (RMG) exports to the US could fall by roughly 12% due to a 20% tariff. The Bank also flags that US tariff hikes will weigh on South Asia’s economic growth – including its textile and apparel sectors.
Why it matters for sportswear sourcing
Sri Lanka is a major sportswear producer, known for high-quality manufacturing that meets the technical specifications of global brands. Leading Sri Lankan companies like MAS Holdings, Brandix, and Hirdaramani manufacture sportswear for international labels such as Nike and Adidas. The country is a trusted source that combines skilled labour, proximity to raw materials, and existing production capacity with the highest ethical standards.
A sudden tariff shock increases cost pressure, risks order cancellations or supplier margin squeezes, and could force brands to shift sourcing – altering lead times, logistics, and supply-chain stability.
The big picture
The broader trade landscape is getting tougher: the US under Donald Trump has imposed high tariffs on labour-intensive exports from South Asian countries, including textiles and apparel. For Sri Lanka, apparel accounts for a major share of its exports and employment. Activewear and sportswear represent a substantial portion of its apparel exports.
Reality check
While a 12% reduction in export value sounds large, the impact relative to Sri Lanka’s total GDP may appear modest (0.1–0.2% of GDP) if domestic value-added is lower. However, as the Report highlights, the real pain is felt at factory, supplier and worker levels – especially in sportswear subcontracting, which often runs on thin margins and tight timelines.
By the numbers
• Sri Lanka’s apparel exports to the US last year: ~US$1.9 billion (~40% of its apparel exports)
• Estimated loss: ~US$220 million in RMG exports due to tariffs.
• Employment at risk: 16,000 jobs (mainly low-skilled and women).
What to watch
• Supplier cost pressures: Will Sri Lankan factories absorb the tariff hit, or will brands pass costs back via lower prices or cancelled orders?
• Supply-chain resilience: Lead-time buffers and supplier diversification become more critical for sportswear brands reliant on vulnerable sourcing geographies.
• Policy/tariff negotiations: Any deal or tariff relief for Sri Lanka will reshape competitiveness among regional suppliers.
Dive deeper
• Sourcing Journal: World Bank Warns That Trump’s Tariffs Will Hurt Sri Lanka’s Garment Industry
• Sri Lanka Export Development Board: Activewear & Sportswear from Sri Lanka
• World Bank Report: Sri Lanka
