Sri Lanka has found itself navigating a delicate geopolitical balancing act between two of its most significant partners, the United States and China. In an effort to avoid higher import duties, Colombo recently issued a government gazette banning the import of any goods produced, mined, or manufactured—whether in whole or in part—using forced labor. This directive, enforced by the Director General of Customs, requires importers to provide evidence that their products are free from such labor practices if they originate from high-risk sources identified by the International Labor Organization (ILO).
The policy shift was prompted by a June announcement from Washington, which indicated that nations failing to formally prohibit forced labor imports would be subject to heavy tariffs. With the United States accounting for nearly 25 percent of Sri Lankan exports, the government could not afford to be placed in a higher tax bracket. By adopting the ban, Sri Lanka secured a 10 percent tariff rate, placing it among 17 economies—including Canada, India, Mexico, and the U.K.—that have committed to enforcing these prohibitions. Countries failing to do so were hit with a 12.5 percent rate.
Business leaders and politicians in Sri Lanka have largely welcomed the move. The Joint Apparel Association Forum (JAAF) noted that the apparel industry is highly competitive, and even minor tariff differences can determine whether a country wins or loses orders to rival destinations. This view was echoed by the Exporters Association of Sri Lanka (EASL) and former finance minister Ravi Karunanayake. The apparel and textile sector, which generated $4.9 billion in revenue in 2025, remains the country's top merchandise export, with the U.S. market alone accounting for $1.96 billion of that total.
However, the move carries significant diplomatic risks regarding China, Sri Lanka's leading trade partner. The U.S. has specifically targeted China, alleging that cotton from Xinjiang is produced using coerced minority labor. Sri Lanka’s apparel sector remains heavily dependent on inputs imported from China. While Washington presents this as a matter of unfair trade advantage, the narrative is increasingly challenged by data on Chinese industrial modernization. In 2024, China deployed 54 percent of the 542,000 industrial robots installed globally. Furthermore, a 2023 UN Food and Agriculture Organization report indicated that Chinese crop production mechanization exceeded 70 percent by 2019, with Xinjiang’s cotton harvesting now over 97 percent mechanized as of 2025.
By acting as if these allegations of forced labor are credible to stay in Washington's good graces, Sri Lanka risks signaling to Beijing that it is willing to lend legitimacy to a contested narrative. Given the deep integration of trade, investment, and debt ties between Colombo and Beijing, this performative stance creates a dangerous diplomatic friction that could jeopardize future relations.
Imagine that you have two powerful friends you cannot afford to lose. One of them often threatens to punish you unless you publicly denounce the other for something you know the other didn’t do. But you comply because you depend on that friend. But now the other friend is watching, and you’re left hoping they will still take your calls.
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