Sri Lanka seeks early resolution in US tariff dispute, talks set for April 8

• Disputes 88% claim, clarifies actual tariffs on US imports max out at 30%
• Explores options to lower existing tariffs and para-tariffs or increasing US imports 

As the impact of reciprocal tariffs on all US imports continues to reverberate through global markets, following their announcement by US President Donald Trump last Wednesday, Sri Lanka’s Economic Development Deputy Minister Dr. Anil Jayantha stated that the government would engage in a second round of talks with the regional representatives of the Office of the United States Trade Representative (USTR), this week. 

The discussions are scheduled for April 8.  

The US imposed sweeping tariffs last week, including a 44 percent reciprocal tariff on Sri Lankan exports, effective April 9, after determining that Sri Lanka had been applying an 88 percent tariff—including both tariffs and non-tariff barriers—on the American imports.  

At a media briefing held yesterday at the Government Information Department to address the impact of these tariffs, Dr. Jayantha clarified that the 88 percent figure cited by the US was based solely on the trade deficit between the two countries.  

He explained that Sri Lanka imposes a maximum tariff of 20 percent on the US goods, with some products subject to an additional 10 percent Ports and Aviation Levy.  

Sri Lanka exports approximately US $ 3.0 billion worth of goods annually, with apparel accounting for 60 percent of total exports. Meanwhile, the country imports only US $ 500 million worth of goods from the US, creating a significant trade deficit for the US.  

While many expressed shock at the tariffs—particularly the reciprocal measures announced on April 2—Trump had long signalled his intent to impose broad-based tariffs on the US trading partners. His administration has consistently advocated for a rebalancing of the US trade policy and a revival of the country’s declining manufacturing sector.  

Over the past decades, the US has outsourced manufacturing jobs to countries such as China, Vietnam, Mexico and South Korea—nations the Trump administration has labelled part of the Dirty 15, a group running substantial trade surpluses unfavourable to the US. 

Dr. Jayantha dismissed the claims that the government was caught off guard by the tariffs, stating that prior awareness would not have altered the outcome, as the US expects all affected countries to engage in negotiations, following the April 2 announcement. 

Critics, including the opposition parties and industry stakeholders, have accused the government of failing to take pre-emptive measures to mitigate the tariffs’ impact, acting only after the fact—a delay they argue will hinder efforts to secure concessions.  

During an initial meeting with the USTR representatives a day before the announcement, Sri Lankan officials were reportedly urged to propose measures to reduce the trade deficit.  

When asked about the potential steps to cushion the blow to Sri Lankan exports—particularly apparel, which dominates the US-bound shipments—Dr. Jayantha suggested options such as lowering the existing tariffs and para-tariffs or increasing imports from the US.

He cited Vietnam’s decision to reduce its US tariffs to zero, following a call with Trump a day after the tariffs took effect. However, Dr. Jayantha questioned whether such measures would be meaningful for Sri Lanka, given that its imports constitute just 0.1 percent of total US imports.  

He also noted that any tariff reductions would need to align with Sri Lanka’s International Monetary Fund-backed economic stabilisation programme, which includes public revenue targets. Additionally, he highlighted the recent anti-corruption and anti-money laundering initiatives as potential leverage in negotiations.  

Beyond apparel, the government has identified four other sectors likely to be affected by the reciprocal tariffs, which include rubber and plastic products, jewellery and precious metals and chemical products.  

Speaking at the briefing, Finance and Planning Deputy Minister Dr. Harshana Suriyapperuma assured that all engagements with the US representatives would involve the stakeholders from a wide range of affected sectors.