US tariff blow puts SL’s US $ 857mn coconut export industry at risk: Industry
The Ceylon Chamber of Coconut Industry (CCCI) yesterday issued an urgent appeal to the government in response to the US’ decision to impose a 30 percent import tariff on coconut-based products from Sri Lanka, effective August 1, 2025.
The move threatens to upend one of the country’s most valuable export sectors, which currently generates over US $ 857 million in annual revenue and risks pushing thousands of rural livelihoods into uncertainty.
The US is Sri Lanka’s single largest buyer of coconut-based products, accounting for more than 20 percent of the sector’s exports, valued at roughly US $ 160 million each year. According to the CCCI, the new tariff all but destroys Sri Lanka’s price competitiveness in the US market. Competing suppliers such as the Philippines, Vietnam and India enjoy preferential trade access, meaning Sri Lankan products, despite their globally renowned quality, will be sidelined on cost alone. “This isn’t just a policy shift. It’s a devastating blow to an entire industry that Sri Lanka has worked hard to build,” said CCCI Chairman Jayantha Samarakoon.
“Our products are recognised globally for their purity, taste and nutritional value. But no matter how good they are, a 30 percent tariff makes them unaffordable for buyers. We will be priced out of the market, not because of quality but because of cost. While we acknowledge the reduction from the originally proposed 44 percent, even at 30 percent, the impact remains deeply damaging to our export competitiveness and to the hundreds of thousands of rural livelihoods tied to this industry.” The export basket at risk includes a wide range of value-added goods: desiccated coconut, virgin and refined coconut oil, coconut milk and cream, coconut water, coir fibre products, activated carbon and husk-based growing media. Many of these are premium niche exports that Sri Lanka pioneered in the global market but buyers will now have little choice but to shift sourcing to cheaper destinations.
The impact, however, goes far beyond trade statistics. Over 800,000 Sri Lankans depend on the coconut industry for their livelihoods, including smallholder farmers, processors, factory workers, logistics providers and exporters. More than 150,000 direct jobs in the manufacturing and processing sectors are now under immediate threat. A sudden drop in export demand could flood the domestic market with unsold produce, pushing down farm gate prices and cutting off income streams for rural families already grappling with inflation and rising production costs. The CCCI also warns of broader economic fallout. A downturn in coconut exports could trigger a collapse in investor confidence and foreign direct investment, particularly as Sri Lanka works to position itself as a reliable, competitive sourcing destination under its ongoing International Monetary Fund reform programme. With other coconut-producing countries offering stronger policy support and lower-cost structures, there is a real risk of local industrialists shifting operations abroad — taking jobs, capital and long-term opportunity with them.
