Apparel exports to US could fall by 20%

Abstract

On 2 April, US President Donald Trump imposed a 44 percent tariff on Sri Lankan exports to the United States. With apparel comprising 64 percent of these exports—valued at nearly USD 1.8 billion in 2023—Sri Lanka’s apparel industry is likely to suffer the greatest impact. The reciprocal tariffs imposed across all exporters to the US could potentially reduce overall US demand for apparel. Consequently, this analysis conducted using World Bank's SMART partial equilibrium model, reveals that Sri Lanka's apparel exports to the US may decline by approximately 20 percent (over USD 300 million). The model simulated the impact on US demand of an increase in the weighted average tariff for US apparel to 36 percent.