Sri Lanka has been included among 60 nations subjected to a new import tax by the United States due to its inadequate enforcement of a ban on importing goods produced through forced labor, according to the Office of the United States Trade Representative (USTR).
The USTR report indicated that Sri Lanka has not successfully implemented or enforced a prohibition against imports related to forced labor. The investigation concluded that this failure is unreasonable and imposes burdens on U.S. commerce.
Analysts warn that this new tax could further challenge Sri Lankan exporters, particularly as the U.S. is the island nation’s largest export market, accounting for approximately 22 percent of Sri Lanka’s total exports, predominantly in garments.
This decision follows a ruling in February 2026 by the U.S. Supreme Court, which annulled a reciprocal tariff system that had reduced the tariff rate for Sri Lanka from 44 percent to 20 percent following negotiations.
The U.S. has also enforced a temporary 10% ad valorem duty on certain exports to the U.S. for 150 days, with indications that this rate may be revised under alternative legal frameworks.
USTR Ambassador Greer emphasized the seriousness of the issue, stating, “The failure of our key trading partners to address the importation of goods made with forced labor is unacceptable. This creates an uneven playing field for American workers.” He noted that while some partners have taken steps to combat forced labor imports, there is a pressing need for all partners to enhance their efforts to ensure fair trade practices.
The USTR’s report highlighted concerns about the risk of cotton linked to forced labor circumventing U.S. import prohibitions through intermediary manufacturers in various countries, including Sri Lanka. It pointed out that many supply chains lack transparency, potentially leading to unintentional imports of goods made with forced labor by international brands, including those based in the U.S.
The Uyghur Forced Labor Prevention Act (UFLPA) establishes a presumption that goods produced wholly or partly in China’s Xinjiang region are made with forced labor and are thus barred from entering the U.S.
The USTR announced a 10 percent duty for economies that have imposed a prohibition on forced labor imports and committed to enforcing such a ban through reciprocal trade agreements. For economies that have not taken adequate measures, a proposed additional duty of 12.5 percent was suggested.
Additionally, the USTR is considering a textile mechanism that would permit a limited volume of apparel and textile imports from select nations to enter the U.S. at a reduced tariff rate, although it remains unclear if Sri Lanka will qualify.
The USTR’s findings also included 54 other economies that have not effectively enforced a ban on forced labor imports, such as Australia, Bangladesh, China, India, and several others, including members of the European Union and various Middle Eastern nations.
For the complete statement, please refer to the USTR’s official release.
