The Planters’ Association of Ceylon (PA) has expressed grave concern over the United States’ decision to impose a 30% tariff on Sri Lankan tea and rubber exports, set to take effect from August 1st. The Association warns that this move could devastate two of Sri Lanka’s most historic and employment-intensive sectors, tea and rubber undermining decades of market-building and trade diplomacy.
PA is calling for urgent interventions, particularly as key competitor nations like Vietnam and India are already in talks to secure reduced tariffs, while Indonesia has already finalized a preferential trade deal.
Tea Industry at a Critical Juncture
Ceylon tea had enjoyed a zero duty access to US markets and with this move, there will be 30% percent duty slammed on tea exports. This decision for 30% will affect the country’s tea exports to the US markets. In 2024, the U.S. imported 6.4 million kilograms of Ceylon Tea, valued at USD 45 million, reflecting a 22% increase in volume and an 11% increase in value over 2023. Of these exports, 65% were value-added products such as packaged, blended, flavored and instant teas, indicating strong demand for premium Sri Lankan offerings.
“The average FOB price of tea exported to the U.S. stood at USD 7 per kg, significantly higher than the national average of USD 5.83 per kg in 2024, highlighting the premium positioning of Sri Lankan tea in the U.S. market” said Former Chairman of Tea Exporters Association, Ganesh Deivanayagam.
Sri Lanka also commands a 20% share of the U.S. hot tea segment, despite the market being dominated by iced tea (80% of consumption). With annual tea consumption in the U.S. growing at around 6%, the country remains a critical market for high-value, differentiated tea products from Sri Lanka.
The timing of the tariff is especially damaging. As of April 11, 2025, nearly 300,000 kg of tea valued at USD 3.24 million was already en route to the U.S. and an additional 21,000 kg worth USD 479,000 was awaiting clearance at U.S. ports. Following the tariff announcement, confirmed orders for 225,970 kg valued at USD 3.14 million were suspended. Although recent reports indicate some shipments are now being cleared by buyers willing to pay a 10% duty, the uncertainty has disrupted cash flows and confidence among exporters.
The US market plays a critical role in supplementing Colombo auction prices, which has a direct impact on the livelihood of the plantation workers and the small holders.
Rubber Sector on the Brink
The rubber industry is facing a similarly dire outlook. With over USD 330 million in annual exports to the U.S. primarily solid tyres, medical gloves, and PPE, the new tariff has already led to order suspensions and growing investor anxiety.
The 30% tariff makes Sri Lanka non-competitive overnight as we will lose ground to Vietnam and India, who are actively negotiating better terms. As a sector supporting over 150,000 livelihoods and contributing nearly a billion dollars to the economy, this is a serious threat to our survival.
Some Sri Lankan firms have already paused shipments, anticipating long-term buyer migration to cheaper alternatives. With 80% of global demand for Sri Lanka’s solid tyres coming from the U.S., the threat is immediate and substantial.
The broader consequences such as stalled foreign direct investment, rural economic uncertainty and no viable fallback for communities dependent on long-gestation crops like rubber.
A Call for Immediate Government Action
PA is urging the government to engage directly with the U.S. Trade Representative, seeking relief for agricultural commodities like tea and medical-grade rubber. These sectors are vital for rural employment and carry strong ethical and sustainability credentials in global markets.
The Association is also advocating for temporary relief measures for affected producers, including duty drawback schemes, retraining programs for affected workers and export marketing assistance to mitigate immediate disruptions. It further emphasized the need for market diversification and long-term investment in branding and innovation, to safeguard the country’s competitiveness and resilience.
