By: Staff Writer
April 13, Colombo (LNW): Despite mounting global trade pressures, Sri Lanka is holding firm on its $18.7 billion export target for 2025. The government’s stance comes amid a 44% tariff hike by the United States and the possible suspension of the European Union’s GSP+ trade benefits due to concerns over human rights practices.
The Generalised Scheme of Preferences Plus (GSP+), which allows Sri Lankan exports reduced tariffs to the EU, has been vital for key sectors such as apparel, seafood, and rubber. Any withdrawal of this preferential access could severely damage export competitiveness and lead to job losses, especially in the apparel industry—one of the country’s largest employers.
While the EU’s concerns are centered on human rights compliance, the U.S. tariff hike, announced by former President Donald Trump, forms part of a broader global trade strategy and is not exclusively aimed at Sri Lanka. However, the Ministry of Trade, Commerce, and Food Security acknowledges the potential fallout, as Sri Lanka exports nearly $3 billion worth of goods to the U.S., with apparel alone contributing $1.8 billion.
“We believe this tariff may be related to our trade imbalance with the U.S., where we import only about $300 million,” a ministry spokesperson stated. “But we remain optimistic and are seeking a diplomatic resolution.”
Officials further confirmed that even if no exemption is reached, Sri Lanka is preparing to diversify its export markets. Early discussions are underway to boost trade with Europe and Asia, ensuring resilience in case U.S. access becomes more restricted.
The Export Development Board (EDB) has projected $14.54 billion from merchandise exports and $4.16 billion from services by 2025. Despite the expected increase in competition due to rising costs, the government maintains that the U.S. market won’t be entirely lost.
Meanwhile, Colombo-based think tank Verité Research has urged a multilateral approach through the World Trade Organization (WTO) rather than isolated bilateral deals. They warn that unilateral moves like Trump’s tariff hikes weaken global trade norms. Verité recommends a “Cooperative Common Response” to defend the integrity of the international trading system.
Diplomatic efforts are ongoing. While the U.S. typically avoids direct government-to-government trade negotiations, Sri Lanka has initiated virtual discussions. Deputy Economic Minister Anil Jayantha said energy imports and tariff reforms may be used as bargaining tools during these talks.
With no plans to adjust its 2025 export ambitions, Sri Lanka is navigating the complexities of global trade with a dual strategy: defending its current markets while actively pursuing new ones. Whether through diplomacy or diversification, officials remain committed to shielding the economy from external shocks.
