The World Bank has warned that the tariff measures introduced under the Trump administration will damage Sri Lanka's garment industry, according to a report by WWD.

The warning lands on an apparel sector that ranks among Sri Lanka's largest export earners and supplies major US and European buyers. Garments account for a substantial share of the country's merchandise exports, and the United States is the single most important destination for Sri Lankan apparel — a concentration that makes the industry structurally exposed to any shift in US tariff policy.

For Sri Lankan manufacturers, the risk is commercial rather than abstract. US buyers negotiating autumn and spring programmes price landed cost on a duty-inclusive basis. A higher tariff line on Sri Lankan origin raises that landed cost relative to competing sourcing countries, which puts pressure on order allocation long before any formal policy change takes full effect. Vendors in Bangladesh, Vietnam, India and Egypt compete in the same product categories — basics, activewear, intimates and workwear — and buyers can shift volumes across origins within a single sourcing season.

The World Bank's assessment, as reported by WWD, positions the tariff threat alongside the other structural constraints the Sri Lankan industry already manages: energy costs, labour availability and the country's recovery path from its recent economic crisis. The sector employs hundreds of thousands of workers directly, concentrated in industrial zones in the Western and Northern provinces, with a wider workforce in the supply chain through fabric, trim and logistics providers.

The report from WWD does not specify exact tariff rates, effective dates or projected export losses, and the World Bank's warning should be read as a directional risk assessment rather than a quantified forecast. No specific buyer-supplier commitments or order cancellations were cited in the reporting.

For sourcing executives, the warning forces two near-term decisions. First, US-based buyers with Sri Lankan programmes must model the tariff exposure in their landed-cost calculations now, rather than waiting for clarity on rates, because vendors will pass margin pressure into price negotiations. Second, Sri Lankan suppliers and their industry bodies face a compliance and advocacy workload: documenting the country's preferential access claims, engaging US trade authorities, and diversifying toward the EU and UK markets, where Sri Lanka benefits from established trade arrangements and compliance credentials on labour and environmental standards.

The decision the news forces is a portfolio one: whether to reduce Sri Lankan exposure in US-bound programmes as a hedge, or to hold volume and share the tariff burden across the buyer-vendor margin. That call now sits with sourcing directors on both sides of the transaction.