By: Staff Writer
April 03, Colombo (LNW): US President Donald Trump has introduced a broad set of reciprocal tariffs, imposing a minimum 10% tax on all imports and significantly higher rates on countries with which the US has trade deficits.
As a consequence, Sri Lanka now faces the sixth-highest tariff rate globally—44%, a sharp rise from its previous 12.2% rate.
Sri Lanka’s economy is particularly vulnerable to this tariff hike, as 25% of its total exports, mainly apparel, are shipped to the US. In 2024, Sri Lanka earned USD 3 billion from exports to the US, with USD 346 million generated in January 2025 alone.
Economists warn that the apparel sector, a key driver of employment, could suffer significant losses due to the steep increase in tariffs. A potential decline in export revenue could threaten jobs, leaving thousands unemployed.
Dr. Harsha de Silva, a key opposition leader from the Samagi Jana Balawegaya (SJB), has called on the government to take swift action to safeguard trade relations with the US, Sri Lanka’s largest export market.
He emphasized that inexperience cannot be an excuse for inaction and offered to assist the government in addressing the trade challenges.
Experts caution that higher tariffs will increase the cost of Sri Lankan imports and reduce the competitiveness of Sri Lankan goods in the US market.
To counter these challenges, Sri Lanka must adopt strategies to mitigate the negative impacts of shifting global trade policies.
The government has already imposed various levies, such as the port and airport levy and the export development CESS.
However, these para-tariffs raise costs for businesses outside Board of Investment (BOI) zones, making it harder for them to compete internationally.
Deputy Minister of Industry and Entrepreneurship Development Chathuranga Abeysinghe announced plans to implement a long-awaited tariff policy that aims to create a predictable and transparent trade framework.
This new policy will help exporters secure raw materials at competitive prices. Other proposed measures include setting minimum prices for key inputs, lowering energy and transport costs, and enhancing the business environment to attract investment.
A senior economist, speaking anonymously, highlighted the need for a transparent mechanism to evaluate industry proposals on tariff adjustments. Such a data-driven system would ensure that businesses and workers receive necessary support during the transition.
Meanwhile, Sri Lanka’s Minister of Labour and Deputy Minister of Economic Development, Dr. Anil Jayantha Fernando, stated that the government plans to negotiate with US officials before April 9 to seek a reduction in the newly imposed tariffs.
He acknowledged that while Sri Lanka was aware of the potential policy shift, it could not intervene before the US formally enacted the changes.
Dr. Fernando remains optimistic that Sri Lanka could secure a tariff reduction, citing the country’s ongoing collaboration with the International Monetary Fund (IMF) and its economic recovery efforts.
He also noted the possibility of leveraging the GSP+ tariff system as an alternative if negotiations with the US do not yield favorable results. The government is determined to maintain strong trade and investment ties with the US while seeking long-term solutions beneficial to both nations.
