By: Staff Writer
July 17, Colombo (LNW): Sri Lanka’s vital coconut industry faces a major crisis following the United States’ decision to impose a 30% import tariff on coconut-based products from the island nation, effective August 1.
The move threatens the survival of a sector that brings in over $857 million in annual export revenue and supports the livelihoods of more than 800,000 Sri Lankans, including smallholder farmers and factory workers. Industry leaders warn that the steep tariff could cripple exports, push down domestic prices, and trigger broader economic fallout.
The Ceylon Chamber of Coconut Industries (CCCI), in an urgent appeal to the Government, called the US decision a “devastating blow” to one of Sri Lanka’s most valuable and labor-intensive industries. The US is the single largest buyer of Sri Lankan coconut-based goods, accounting for more than 20% of exports valued at approximately $160 million annually.
“This isn’t just a policy change—it’s an existential threat to an entire sector,” said CCCI Chairman Jayantha Samarakoon. “Even though the original proposed tariff was 44%, the revised 30% is still enough to wipe out our competitive edge. Sri Lanka cannot compete when countries like the Philippines, Vietnam, and India enjoy preferential access to the US market.”
The impact of the tariff goes well beyond trade figures. It endangers over 150,000 direct jobs in coconut processing and manufacturing and could drive down farm gate prices as unsold stock floods the local market. This would severely affect rural communities already burdened by inflation, high input costs, and climate-related disruptions.
Products affected by the new tariff include desiccated coconut, virgin and refined coconut oil, coconut milk and cream, coconut water, coir-based items, activated carbon, and growing media made from coconut husks. Many of these are high-value niche exports that Sri Lanka pioneered, earning a global reputation for quality and sustainability.
In response, the CCCI has urged the Government to urgently engage with the Office of the US Trade Representative (USTR) to seek relief, exemptions, or renegotiated access terms. The Chamber also called for fast-tracked efforts to secure bilateral trade agreements and implement targeted support measures for exporters to weather the immediate storm.
Samarakoon emphasized that this issue must be treated as a national priority. “If we fail to act, not only will we lose export revenue and rural income, but we risk undermining investor confidence in a sector that has shown consistent growth and potential. This could derail efforts under the IMF reform program to position Sri Lanka as a competitive global sourcing destination.”
Without swift action, stakeholders warn that the industry could see capital flight, with some manufacturers considering relocating operations to countries with better market access—taking jobs, investment, and growth potential out of Sri Lanka.
