By: Staff Writer
February 22, Colombo (LNW): The US Supreme Court’s 6-3 decision curbing former President Donald Trump’s sweeping “reciprocal” tariffs has triggered immediate tremors across global supply chains none more acutely than in Sri Lanka’s apparel sector, which had been bracing for punitive duties on exports to the United States.
In a sharply worded ruling, the Supreme Court of the United States held that the president lacked authority under the International Emergency Economic Powers Act to impose ad hoc tariffs by citing a national emergency. The majority warned that such duties would represent a “transformative expansion” of executive power over taxation—an authority constitutionally vested in Congress.
For Sri Lanka, the judgment briefly lifted the cloud over billions of dollars in apparel exports, much of it destined for US retailers. The island’s garment industry already squeezed by domestic macroeconomic instability and a weaker rupee had faced the prospect of sudden price disadvantages against competitors in Vietnam, Bangladesh, and Mexico.
Nevertheless the relief may prove short-lived.
US Trade Representative Jamieson Greer swiftly signaled a pivot. A temporary 10 percent surcharge, he said, could be imposed under Section 122 of the Trade Act of 1974, alongside fresh investigations under Section 301 targeting “unjustifiable” or “discriminatory” trade practices by partners.
Section 122 allows limited short-term import restrictions to address balance-of-payments concerns, but requires procedural steps. Section 301 investigations, meanwhile, can stretch months and culminate in tailored duties. Analysts say the administration is attempting to reframe tariffs within statutory guardrails rather than broad emergency powers.
For Sri Lankan apparel exporters, uncertainty is as damaging as the tax itself. US buyers operate on tight seasonal cycles and thin margins. Even a threatened 10 percent surcharge forces contract renegotiations, inventory shifts, or sourcing diversification. Industry leaders in Colombo say American brands have already sought price concessions, citing potential tariff exposure.
The ruling also underscores a deeper constitutional battle in Washington. The court’s conservative majority often seen as sympathetic to executive power drew a line on fiscal authority. Trump lashed out at the justices as “unpatriotic,” but the bench emphasized that taxation without congressional approval upends separation of powers.
Sri Lanka’s predicament mirrors that debate. Critics at home have raised alarms over “midnight gazette” taxes imposed without broad consultation, including levies on essential goods. The Supreme Court’s intervention in the US highlights how institutional checks can recalibrate trade policy.
Still, not all tariffs are off the table. Duties on steel, imposed under different statutes, remain intact. And if Section 301 probes proceed, they could widen into sectors such as digital services, pharmaceuticals, and agricultural products areas where Sri Lanka faces scrutiny over regulatory practices and impending digital service taxes encouraged by the IMF program.
For now, Sri Lanka’s apparel sector is caught between judicial restraint and executive resolve in Washington. The court may have struck down one route to higher tariffs, but alternative pathways remain open keeping exporters on edge as they navigate America’s shifting trade winds.
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