Sri Lanka caught in widening USA supply chain crackdown as the United States moves forward with a broad trade investigation that could result in additional tariffs on imports from dozens of countries, including Sri Lanka.
Sri Lanka among countries targeted as US reviews supply chain compliance and labour standards
The proposed measures have raised concerns for Sri Lanka exports, particularly the apparel industry, which depends heavily on the United States market and has long promoted its reputation for ethical manufacturing and compliance with international labour standards.
The Office of the United States Trade Representative (USTR) has proposed an additional 12.5 percent duty on products imported from Sri Lanka as part of a wider effort to address the entry of goods allegedly linked to forced labour into global supply chains. Sri Lanka is among 54 economies identified under the investigation as having failed to adequately prevent such imports.
The trade probe was launched in March under Section 301 of the US Trade Act of 1974. According to the USTR, the investigation assessed whether trading partners had introduced and effectively enforced measures to block imports produced using forced labour. The agency concluded that all 60 economies reviewed had shortcomings in either implementing or enforcing these restrictions, exposing them to potential trade action.
The proposed US tariffs are not yet final and remain subject to a public consultation process. The USTR has invited written submissions from stakeholders until July 6 and plans to conduct public hearings on July 7 before deciding on any final measures.
For Sri Lanka, the announcement comes at a challenging time. Exporters are already navigating softer consumer demand in major overseas markets, elevated shipping and logistics costs, and growing uncertainty surrounding global trade policies. Any additional duties imposed by the United States could place further pressure on export-oriented industries that rely on competitive pricing and stable market access.
The apparel industry is expected to be among the sectors most closely watching developments. The United States remains Sri Lanka’s largest single export destination, with garments accounting for a significant share of export earnings. Industry stakeholders have consistently highlighted the country’s commitment to ethical sourcing, worker welfare, and responsible manufacturing practices as key differentiators in the global marketplace.
US Trade Representative Jamieson Greer defended the proposed measures, arguing that stronger enforcement is needed to prevent unfair competition created by products linked to forced labour.
“The failure of our most important trading partners to address the importation of goods made with forced labour is unacceptable. This creates a dynamic where American workers are forced to compete globally on an unlevel playing field,” Greer said.
He added that while some trading partners had taken initial steps to address the issue through trade agreements and other commitments, further action was required to ensure that international trade does not encourage or sustain forced labour practices.
Sri Lanka appears alongside several major manufacturing and exporting economies on the list, including China, India, Bangladesh, Vietnam, Thailand, Malaysia and South Korea. The inclusion of such a broad group of countries highlights the global scope of the US initiative and its focus on strengthening labour-related trade enforcement.
The USTR has also proposed a separate mechanism that would allow a specified volume of textile and apparel imports from selected economies to enter the US market under a lower tariff structure. Further details on how this mechanism would apply to individual countries are expected to emerge during the consultation process.
The fact that Sri Lanka caught in widening USA supply chain crackdown has attracted attention across the export sector, given the potential impact on trade competitiveness and market access. Businesses and industry associations are likely to closely monitor the consultation process while assessing possible implications for Sri Lanka exports and the apparel industry.
As the review continues, the outcome will be significant for exporters seeking clarity on future US tariffs and the evolving standards governing international supply chains and labour compliance.