By: Staff Writer
July 21, Colombo (LNW): Sri Lanka’s rubber industry, a vital pillar of the nation’s export economy, is facing mounting challenges in sustaining its competitiveness in international markets, particularly the United States.
Once a robust contributor to export earnings, the industry is now grappling with the consequences of international tariff changes, rising global competition, and declining production volumes.
In 2024, Sri Lanka’s rubber industry experienced growth in export earnings, reaching US$ 1,001.54 million, a 7.66% increase compared to 2023. This growth was driven by increased exports of industrial and surgical gloves, as well as pneumatic and retreated rubber tires and tubes. The country’s total natural rubber production in 2024 was 69,185 MT. Sri Lanka is also a leading exporter of solid tyres and latex-based gloves.
Sri Lanka’s rubber exporters are voicing deep concern over the looming August 1 deadline for negotiations on tariffs imposed under the Trump administration, warning that failure to reach a more favorable agreement could result in the loss of the vital U.S. market.
Industry spokesperson Kamal Silva stressed the urgency of revising the current tariff regime, noting that Sri Lankan rubber products face a steep 30 percent U.S. import duty, rendering them uncompetitive against regional rivals like Indonesia. “Even before the new tariff rates, we were struggling to keep pace. A 15 percent tariff is ideal for Sri Lankan exporters to maintain a competitive edge,” Silva told PTI, adding that the sector generates approximately USD 300 million annually from U.S. exports alone.
The situation has been exacerbated by the preferential treatment given to Indonesia, which has secured lower tariffs and now holds a significant cost advantage. Dhammika Fernando, representing the Sri Lankan Free Trade Zone Exporters’ Association, acknowledged this disparity and expressed cautious optimism over ongoing discussions. “We’ve been informed that up to 1,600 goods and services might be granted duty-free access by the U.S. If finalized, that would be a major relief,” he said.
Currently, a Sri Lankan trade delegation is in Washington D.C. to continue negotiations, with Deputy Economic Development Minister Anil Jayantha stating that the talks involve 1,161 items, of which the U.S. has preliminarily agreed to grant zero tariffs on around 80.
The issue goes beyond rubber. The apparel sector, which accounts for nearly 40% of Sri Lanka’s total exports, has also flagged concerns. High U.S. tariffs could erode Sri Lanka’s competitiveness in its largest single market, which accounts for nearly a third of the country’s total exports valued at USD 3 billion. In comparison, U.S. exports to Sri Lanka remain relatively modest at around USD 300 million.
As the August 1 deadline nears, the outcome of these negotiations will be pivotal in determining whether Sri Lanka can reclaim lost ground or risk further erosion of its export base, especially in rubber and apparel sectors already under strain from global headwinds.
