ECONOMYNEXT – Four Sri Lankan listed companies are likely to be hit by U.S. President Donald Trump’s reciprocal tariffs because of their exposure to US export market, the research arm of Capital Alliance Holdings Limited (CAL Group) said.
The reciprocal tariff rate on Sri Lanka at 44% was the 6th highest imposed in the sweeping tariff measures announced to be in effect from 9th April.
CAL has identified four listed companies with the largest export exposures to the US market.
* Hayleys Fabric PLC (MGT): Shares in MGT fell 12.9 percent on Thursday (03). CAL research said the MGT is adversely impacted due to 100% manufacturing in Sri Lanka. “MGT’s high exposure to Nike and VSCO, which account for 59% of MGT’s order book, could leave the company vulnerable to order shifts to cheaper manufacturing locations and poor demand.”
* Teejay Lanka PLC (TJL): Shares in TJL fell 9.5 percent on Thursday (03). “Ability to fulfill orders from its India plant will cushion TJL’s orderbook. India is expected to strike a favourable bilateral trade deal with the US, and as such it may see a reduction in the 26% tariff mentioned, making it an attractive option for textile and apparel manufacturing. TJL’s flexibility to redirect EU-bound exports to its Sri Lanka plants is an added advantage to mitigate impacts from US tariffs.”
“We await further clarity on implementation by specific goods categories and any revisions that could be made following responses from impacted nations, including Sri Lanka,” CAL said.
Among the key export items, apparel exports will be the most negatively impacted, as larger apparel exporting nations like Bangladesh (37% tariff), India (26%) and Philippines (17%) face lower tariffs compared to Sri Lanka.
In addition, Sri Lanka may not be seen as an attractive alternative for manufacturing from Vietnam (46%) and Cambodia (49%) as the differential is marginal.
“Overall, the apparel sector may see a slowdown in its recent volume growth as higher pricing hits US consumers and recessionary conditions intensify. This could drill down into margin pressure across the supply chain as retailers look to contain earnings shortfalls.”
On other exports Dipped Products (DIPD) is expected to have a neutral impact, CAL said. But the shares in Dipped Products fell 7.2 percent on Thursday.
“US accounts for 12% of its hand glove exports, with largest exposure to EU (57%). The imposition of reciprocal tariffs could see markets like Indonesia (36% tariff) and Thailand (36% tariff) benefit from comparatively lower tariffs. DIPD may benefit from its acquisition of the Thailand glove manufacturing facility in August, however, slow global growth could keep volume growth limited for the segment.”
* HayCarb PLC (HAYC) is also expected to have a neutral impact, according to CAL, though the shares fell 4.2 percent.
“US accounts for 16% of HAYC’s exports vs. exports to Asia of 52%. HAYC holds 44% of its manufacturing capacity in Indonesia and Thailand, both of which currently face more favourable tariffs compared to China (54% tariff), the largest exporter of activated carbon, and Sri Lanka (5th largest global exporter).” (Colombo/April 03/2025)
