US Tariff Hits 86% of Sri Lanka’s Export Products, Threatening Key Sectors
Sri Lanka is facing a significant trade challenge as the U.S. imposes a 44% reciprocal US tariff on its exports, affecting 86% of the country’s export products. This tariff threatens the competitiveness of key Sri Lankan industries, including textiles, rubber, food products, and jewelry, in the U.S. market. Despite efforts to engage in discussions, Sri Lanka must navigate not only trade negotiations but also IMF fiscal constraints that may complicate any tariff adjustments.
New 44% Tariff Threatens Sri Lanka’s Trade Competitiveness with the U.S.
Sri Lanka is facing a major trade challenge as the U.S. prepares to implement a 44% reciprocal US tariff on its exports, which will impact 86% of the country’s export products. Economic Development Deputy Minister Prof. Anil Jayantha Fernando highlighted that this tariff, set to take effect on Wednesday (April 9), will severely affect the competitiveness of Sri Lankan products in the U.S. market. The US tariff will particularly harm five crucial sectors: textiles, rubber and plastics products, food products, jewelry and precious metals, and chemical products. “The competitiveness of our products is removed through the implementation of the 44% tariff,” Fernando stated, underlining the risk to Sri Lanka’s export economy.
In 2024, the U.S. accounted for 23% of Sri Lanka’s total merchandise exports, with the country sending $3.4 billion worth of goods to the U.S. That figure includes a significant portion from the apparel sector, which makes up around 70% of exports. However, with the new US tariff in place, Sri Lankan goods will lose their competitive edge in a market where other exporters with lower or no tariffs could maintain their foothold.
The US Trade Representative’s office has called on Sri Lanka to propose solutions to reduce the growing trade deficit between the two nations. Despite Sri Lanka’s efforts to open discussions, the U.S. has indicated that talks regarding tariffs will begin only after the full implementation of tariffs on all countries. Consequently, Sri Lanka plans to present its proposals aimed at narrowing the trade gap. However, Sri Lanka is constrained by its ongoing agreement with the International Monetary Fund (IMF), which imposes fiscal conditions. Any removal or reduction of tariffs will require prior IMF approval, adding complexity to the negotiation process.