Sri Lankan rubber exports are able to compete on specialisation of products, quality and accreditations that it has amassed, amidst the introduction of the 30% tariff on Sri Lankan goods by the United States’ Trump administration on 1 August, Plastics and Rubber Institute of Sri Lanka (PRISL) President K. A. C. Vidyaratne told The Daily Morning Business yesterday (30).
“I personally don’t believe that 100% of the exports will stop,” Vidyaratne said, answering a question on the ability for Sri Lankan rubber exports to compete in the US market with an added tariff of 30%, from 1 August.
“For example there are certain rubber products, certain tires that we manufacture that only we produce, as a country. Nobody else is capable of doing it. What we usually produce is part of an assembly or a product. Tire is a great example. We are competing on a specialisation,” Vidyaratne added.
Vidyaratne said that the buyers would likely not be able to source the rubber products from another nation within the short term.
“They can stop buying for a certain time, but once their stocks run out, they will have to buy from somewhere else. When it comes to that, price is one factor, quality is another.”
He said that Sri Lanka’s competitors Vietnam and India do stand a chance to gain from the price competition that is to come once the tariff is introduced.
Vietnam currently faces a 20% tariff, while India faces a 26% tariff, 10% and 4% respectively lower than the intended rate that is to be levelled against Sri Lanka.
“If Trump’s tariff is to come into force, competitors in the region will be Vietnam and India. That will be a competition for us, based on what we produce.”
“What Malaysia, Indonesia and even China is doing is somewhat different. There will be a problem once the tariff is introduced, but it is too soon to comment on how sizable it may be.”
Sri Lanka exported roughly a total of $ 330 million in rubber exports to the US in 2024. The export segment as a whole racked in approximately $ 1 billion in exports in the same year, making the US as a key destination for rubber exports.
PRISL Secretary Pio Perera said that exporters have been noting a revitalisation of export demand since the last announcement by Washington on the impending imposition of tariffs, back in April.
“I was speaking with the exporters yesterday and they say that exports have picked up. These products that leave the country are highly specialised and there are certain parameters that are required to be used with a certain product, the loading, the wear and tear, the electrical conduction and the regulations and certifications,” he said, reinforcing the sentiment of weathering the threat through Sri Lanka’s unique selling propositions, in comparison to regional producers.
“For us to get those certifications, it took us a long time. For buyers to shift to other markets, just because the tariffs have come in, isn’t feasible in the short term. We saw when the tariff was initially announced to be levelled in April, Americans reacted by stopping importing, but they couldn’t manufacture it themselves nor buy it from elsewhere.”
“They can’t go to another country and ask them to give them that product, which would take that country time. For that, those products that have been technically specified will have to come from Sri Lanka until they find a solution to get it from elsewhere.”
Vidyaratne added that exporters noted a marked reduction in production immediately after the announcement of the tariffs, back in April.
“There is one of our members who said that their production dropped by 40% in the last few months, as the tariff was announced. From the first day, it dropped by 40%.”
More optimistically, he added that demand has since grown to surpass pre-tariff announcement levels. “However another member who owns a factory in Sri Lanka said that exports dropped initially, but now they have returned and are doing much better than before the tariff was announced.”