Sri Lanka Stock Market Slides Amid Hormuz Tensions and US Forced‑Labour Ban

Sri Lanka President Anura Kumara Dissanayake announced an immediate ban on importing any goods made wholly or partly with forced labour, a move prompted by a U.S. warning that a 12.5% tariff could be imposed on Sri Lankan exports under Section 301 of the Trade Act. Importers must now provide certified documentation to customs, affecting the country's apparel, textile and agricultural sectors.

At the same time, escalating geopolitical tensions in the Strait of Hormuz have raised concerns about oil‑price spikes and their impact on Sri Lanka’s import bill, fuel costs, foreign‑exchange reserves and the rupee. Investor confidence on the Colombo Stock Exchange weakened, leading to a broad sell‑off of equities and reduced trading volumes as market participants adopt a cautious, wait‑and‑see stance.