Tariff jitters cast long shadow over SL’s rubber sector
- CNL Reporter
- May 10, 2025
- Business News
- Tariff
- 0 Comments
The global rubber market is already feeling the tremors of policy uncertainty, with Sri Lanka caught in the crosshairs, analysts said, while warning there could be a prolonged and painful reshuffle of trade routes, pricing and production flows.
Analysts state that Sri Lanka’s rubber sector could face competitive disadvantages if Sri Lanka fails to secure equitable tariff terms, following the proposed increase in the US tariff rates on rubber products. The natural rubber industry contributes significantly to both employment and foreign exchange earnings as one of the country’s key export sectors and for Sri Lanka’s rubber sector, the implications are immediate and far-reaching.
Although a 90-day suspension has temporarily delayed implementation, the uncertainty is already reshaping market dynamics. According to the Asian Development Bank, the implementation of such a steep tariff is likely to force American buyers to cancel orders already placed with Sri Lanka and redirect their business to countries with more favourable trade terms.
A report by Forbes and Walker Commodity Brokers noted that the auction held on April 8 reflected this growing anxiety, with rubber prices falling sharply across all grades, clear evidence that the market is pricing in weaker future demand. Cambodia and Vietnam are also under pressure, facing tariffs of 49 percent and 46 percent, respectively.
As trade tensions ripple through the industry, rubber prices remain under downward pressure. “While some easing of sentiment has been observed, the overall outlook is one of caution. The coming weeks will be critical as buyers and sellers reassess strategies in light of this evolving trade landscape,” Forbes and Walker Commodity Brokers said.
Tyre manufacturers, sensing shifting winds, have already begun pivoting toward more cost-effective imports. Meanwhile, local producers are holding back inventory, unwilling to lock in deals at what may soon be unsustainable price levels.
