Sri Lanka US tariffs could rise to 12.5% under a proposed American trade measure, prompting Colombo to prepare new customs screening and labour regulations aimed at addressing concerns over forced labour and child labour in supply chains.
Deputy Finance and Planning Minister Anil Jayantha Fernando said Sri Lanka plans to strengthen customs checks to better identify imported goods that may have been made using forced labour. The government also intends to implement international labour standards as part of its effort to avoid additional US tariffs on Sri Lankan exports.
The United States is Sri Lanka’s single largest export market, accounting for around $3 billion in exports, largely made up of apparel shipments. Any increase in US trade tariffs could therefore place added pressure on Sri Lanka’s garment sector, one of the country’s most important foreign exchange earners.
Sri Lanka US Tariffs Linked to Forced Labour Concerns
Sri Lanka is among a group of economies facing proposed US tariffs over concerns linked to forced labour in global supply chains. The measure could impose duties of up to 12.5% on Sri Lankan exports if implemented.
Fernando said Sri Lanka already has a legal framework and strong labour practices, but would take further steps to remove concerns over child labour and forced labour. The proposed measures are expected to focus on customs screening, labour regulation and compliance with international standards.
The US proposal places Sri Lanka at a potentially difficult competitive position because some regional exporters, including Bangladesh and Pakistan, face a lower proposed rate of 10%. For Sri Lanka, the 12.5% tariff risk comes at a time when its export sector remains highly dependent on apparel shipments to major Western markets.
Customs Screening to Target Forced Labour Imports
A major part of the government’s response will involve tighter Sri Lanka customs rules to identify imported goods that may have links to forced labour. The move appears aimed at addressing US concerns that goods made with forced labour could enter supply chains and later be re-exported.
The planned screening measures would require stronger monitoring of imports, supply chain documentation and compliance checks. For export-focused industries, particularly apparel, such safeguards may become increasingly important as Western markets impose stricter labour and human rights requirements on trade partners.
Sri Lanka’s apparel industry reported around $5 billion in overall exports last year and employs roughly 300,000 workers. The sector is the country’s second-largest source of foreign exchange, making it especially vulnerable to tariff shocks or loss of market access.
Sri Lanka Labour Regulations Under Review
Alongside customs reforms, Colombo is also moving to strengthen Sri Lanka labour regulations. The government has pointed to the adoption of the International Labour Organisation’s Convention C190, which concerns violence and harassment in the world of work.
The convention is the first international treaty to recognise the right of everyone to a world of work free from violence and harassment. Sri Lanka ratified the convention in April, and officials have referred to it as part of the country’s broader commitment to improving labour standards.
The government’s position is that Sri Lanka’s domestic labour practices are already strong, but that further regulatory action is needed to satisfy international concerns and protect the country’s export competitiveness.
Apparel Exports Face Pressure
The tariff threat comes as Sri Lanka’s exports have already shown signs of pressure. Government data cited by Reuters shows exports fell 7.4% to $1.53 billion in the first four months of the year.
For the apparel industry, the US market remains crucial. A higher tariff could make Sri Lankan garments more expensive compared with competitors, potentially weakening orders from American buyers.
The risk is particularly significant because Sri Lanka is still recovering from a severe economic crisis and relies heavily on export earnings, remittances and tourism to stabilise its foreign exchange position.
USTR Talks Continue
Fernando said discussions with the Office of the United States Trade Representative are ongoing, although Sri Lanka does not currently plan to send officials to the US for meetings.
The government’s immediate strategy appears to be focused on demonstrating compliance through domestic reforms rather than waiting for the tariff proposal to take effect. Officials are likely to emphasise Sri Lanka’s existing labour protections, new customs measures and commitment to international standards in talks with Washington.
For Colombo, the priority is clear: protect access to the US export market while avoiding any disruption to the apparel sector, jobs and foreign exchange earnings.
Published in SouthAsianDesk, June 20, 2026
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