US Imposes 10% Tariff on Sri Lankan Goods Over Forced Labor

The Office of the United States Trade Representative established a 10% import tariff on Sri Lankan goods effective July 25, 2026. The measure, which includes a ban on imports linked to forced labor, follows Section 301 investigations into the enforcement of labor standards. This new regime replaces a series of fluctuating duties and follows a February ruling by the Supreme Court of the United States that the president had exceeded his authority in imposing previous duties.

Anura Kumara Dissanayake, the President of Sri Lanka, issued a gazette on July 10 prohibiting the importation of goods produced using forced labor. This action allowed Sri Lanka to avoid a higher 12.5% tariff and maintain tariff parity with regional competitors such as India, Bangladesh, and Pakistan. The Sri Lankan government and the Joint Apparel Association Forum described the outcome as a victory for the nation's economic recovery following its 2022 financial crisis.

While the Sri Lankan government credited the leadership of the president and a high-level negotiating delegation for securing the 10% rate, the apparel and textile industries face increased costs and the administrative burden of proving labor compliance. These trade disruptions occur as Sri Lanka continues to manage an IMF-supported stabilization program.