Apparel exports post strongest monthly growth this year on US demand as Sri Lanka’s apparel and textile sector recorded a notable recovery in May 2026, driven by a sharp increase in shipments to the United States and growing demand from emerging export markets.
Apparel exports post strongest monthly growth this year on US demand in May
According to data analysed by the Joint Apparel Association Forum (JAAF), apparel and textile exports rose 7.96% year-on-year to US$394.14 million in May, marking the industry’s best monthly performance so far in 2026. The improvement comes after a challenging start to the year and provides renewed optimism for one of Sri Lanka’s most important export sectors.
The strongest contribution came from the United States, which remains Sri Lanka’s largest apparel export destination. Shipments to the US increased by 15.36% year-on-year to US$149.96 million during May. The strong performance reflects improving buyer demand and continued confidence in Sri Lankan manufacturing capabilities despite a complex global trade environment.
Exports to markets outside Sri Lanka’s three traditional destinations also delivered impressive growth. Shipments to these emerging markets increased by 14.61% to US$70.67 million, highlighting ongoing efforts to diversify export destinations and reduce dependence on a limited number of markets.
Meanwhile, exports to the United Kingdom recorded a modest increase of 0.87%, while the European Union was the only major market to register a slight decline. Exports to the EU slipped by 0.3% to US$121.35 million during the month.
Industry stakeholders believe the strong US performance is particularly significant given the ongoing trade discussions between Sri Lanka and US authorities. The country is currently engaging with the United States Trade Representative regarding a Section 301 investigation related to the prohibition of imports manufactured with forced labour.
The outcome of the review could result in an additional tariff of either 10% or 12.5% being imposed on Sri Lankan exports entering the US market. According to the report released in June, Sri Lanka is among 46 countries currently facing a proposed tariff rate of 12.5%.
Several competing apparel-producing nations, including Bangladesh, Cambodia, Pakistan, and Indonesia, have been assigned a lower tariff rate of 10% due to measures already implemented regarding forced labour compliance. As a result, Sri Lanka’s apparel industry is actively seeking tariff parity to maintain competitiveness in its largest export market.
A public hearing on the proposal is scheduled to take place in Washington on 7 July, making the coming weeks particularly important for Sri Lanka’s export sector. Industry representatives have argued that a fair tariff outcome is essential to sustaining growth and preserving market share in the United States.
JAAF noted that May’s strong performance demonstrates that US buyers continue to view Sri Lanka as a trusted sourcing destination despite potential tariff pressures. The country’s reputation for quality manufacturing, ethical production standards, compliance, and reliability remains a significant advantage in international markets.
The association believes that securing a more favourable outcome under the ongoing US tariff review could help transform the recent export rebound into sustained long-term growth. Industry leaders have consistently lobbied for tariff treatment comparable to that received by regional competitors.
Despite the encouraging monthly figures, the broader picture for the year remains challenging. Sri Lanka apparel exports generated US$1.93 billion during the January to May period, representing a decline of 4.68% compared to the corresponding period in 2025. Exports to the US, EU, and UK all remained negative on a cumulative basis despite May’s recovery.
However, industry observers see signs that the sector could regain momentum during the second half of 2026. Improving buyer confidence, stronger demand in the US market, and continued diversification efforts are expected to support export growth if global economic conditions remain stable.
JAAF said May’s results demonstrate the confidence international buyers continue to place in Sri Lankan manufacturers, even amid ongoing trade uncertainties. The industry remains focused on securing a competitive outcome through the US tariff review while maintaining its commitment to quality and compliance.
As the hearing process moves forward, the outcome will likely play a decisive role in determining whether Sri Lanka can build on May’s encouraging performance and accelerate recovery across the apparel sector. A favourable decision could strengthen competitiveness, support export earnings, and help position Sri Lanka apparel exports for stronger growth in the months ahead.