Sri Lanka faces 50,000 job loss risk amid looming US tariffs: FTZMA

Tuesday, 8 July 2025 03:57 - - {{hitsCtrl.values.hits}}

FTZMA Chairman Dhammika Fernando says Sri Lanka already risks losing competitiveness to Bangladesh, Vietnam, India
Notes uncertainty makes it hard for exporters to plan
Calls on Govt. to diversify products and markets; urge stronger access to UK, EU, Japan, and China
Stresses need to adopt advanced tech to boost productivity and exports

Free Trade Zone Manufacturers’ Association Chairman Dhammika Fernando

Sri Lanka’s economy could face a significant blow, with the Free Trade Zone Manufacturers’ Association (FTZMA) yesterday cautioning that the proposed tariffs by US President Donald Trump may trigger the loss of up to 50,000 jobs in the initial phase and undermine the country’s competitiveness across South and Southeast Asia.

Addressing the media, FTZMA Chairman Dhammika Fernando expressed deep concern over the situation, noting that nearly 20% of Sri Lanka’s trade earnings, driven largely by exports, could be in jeopardy.

“At the outset, data suggests that around 50,000 jobs could be lost,” he warned.

With the US being Sri Lanka’s largest single export market, and the apparel sector shipping around 20-25% of apparel and textiles, Fernando said the proposed tariffs—part of Trump’s broader “reciprocal” trade strategy—could severely erode the competitiveness of Sri Lankan goods.

On 2 April, the US President announced a 10% baseline tax on all imports and substantially higher rates for countries with trade deficits against the US. Sri Lanka was among those hardest hit, facing a steep proposed tariff of 44%.

Following intense international pushback, the US suspended the implementation of these additional tariffs for 90 days to allow for negotiations. This suspension expires on 9 July, with the US President last Friday warning that tariffs could rise even further up to 70% if no deals are struck and would be

enforced from

1 August.

When asked what would be the ideal tariff rate given Sri Lanka’s economic situation, he said the ideal scenario would be zero tariffs and if not the least rate of 10%.

“We’re already facing competitive pressure from regional players,” Fernando said, naming Bangladesh, India, Vietnam, Laos, and Cambodia as countries that enjoy better access to the US market and are well-positioned to absorb Sri Lanka’s potential market share.

“We’re not even sure if the figure is 44% or as high as 54% when the 10% base tax is included,” he said, pointing out that the uncertainty makes it extremely difficult for businesses to plan ahead.

Citing Vietnam’s recent success in securing lower tariff terms, Fernando expressed hope that Sri Lanka could negotiate a similarly favourable outcome.

Amid these external challenges, he stressed the need for urgent economic reorientation. “We must act on two fronts—diversifying our product range and expanding into new markets,” he said. He called on the Government to actively support this transition and highlighted the potential in markets such as the UK, EU, Japan, and China.

He also stressed the importance of adopting advanced technology to enhance productivity and strengthen Sri Lanka’s competitiveness in the global export market.

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