US Tariff Threat Jeopardizes Sri Lanka’s Glittering Export

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Sri Lanka’s world-renowned gem and jewellery industry, a centuries-old sector central to the nation’s economy and cultural identity, is under serious threat from a proposed reciprocal tariff by the United States. Industry leaders have voiced alarm over the potential fallout, warning that the tariff hike could severely disrupt exports, reduce competitiveness, and endanger the livelihoods of over 600,000 people directly and indirectly employed across the value chain.

The United States currently sources around 10% of its gemstones from Sri Lanka, either directly or via key intermediary trade hubs such as Thailand, Hong Kong, Dubai, and Switzerland. This longstanding trade relationship has nurtured mutual economic growth, while helping preserve a rich tradition of craftsmanship and entrepreneurship rooted in Sri Lanka’s gem-producing heritage.

However, industry sources now warn that the proposed US tariffs could reverse decades of progress. By making Sri Lankan gems and jewellery more expensive in the American market, the new duties would reduce export volumes, squeeze margins for small and medium-sized enterprises (SMEs), and trigger job losses across sectors—from mining and cutting to trading, designing, and exporting.

“This could have devastating consequences for families already burdened by economic challenges and recovering from the pandemic,” one source noted. The industry fears that the social and economic ripple effects of a tariff would extend far beyond business losses, threatening the very fabric of communities dependent on the gem trade.

Moreover, the tariff risks fracturing a bilateral relationship built on trust, quality, and mutual economic benefit. Sri Lanka’s gemstone sector has long been prized globally for its quality and diversity, contributing significantly to the US jewellery market. Industry leaders stress that maintaining duty-free or preferential access is crucial—not only for preserving local livelihoods but also to meet American consumer demand for authentic, ethically sourced gems.

Given the seriousness of the threat, Sri Lanka’s gem and jewellery sector is calling on the government to engage in urgent diplomatic dialogue with the US administration and relevant trade bodies. The goal: to seek the removal or reconsideration of the proposed tariff.

“Preserving this vital trade link is not just about economic survival—it’s about upholding fair trade, protecting heritage, and ensuring international cooperation endures in uncertain times,” industry representatives emphasized.

As Sri Lanka navigates a fragile post-pandemic recovery, the outcome of this trade dispute could have lasting repercussions on one of its most iconic and economically vital industries.

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