Sri Lanka to push US for more trade relief post-tariff drop

• Set to meet USTR next week in another round of talks  
• Says steepest cut to tariff rate was possible from early and good faith engagement with US

By Mirror Business Desk   

The government yesterday welcomed the United States’ decision to lower its reciprocal tariff on Sri Lankan goods to 30 percent from 44 percent, effective August 1, but said it would continue talks with Washington to secure further concessions and protect the country’s regional trade competitiveness. 

Officials said Sri Lanka will meet representatives from the Office of the United States Trade Representative (USTR) in the coming weeks to advance negotiations. 

At a special media briefing convened to explain the implications of the tariff cut, Treasury Secretary Dr. Harshana Suriyapperuma pointed out the reduction was the sharpest granted among regional peers. This was possible he said, due to Sri Lanka’s early and sustained engagement with Washington since the tariffs were first announced on April 2.   

“The new tariff rate places Sri Lanka ahead of several regional competitors,” he said, noting Bangladesh and Cambodia now face duties of 35 percent and 36 percent respectively.   

However, Sri Lanka’s rate remains higher than the 20 percent imposed on Vietnam’s direct exports, though Vietnamese transshipments are subject to a 40 percent tariff under a recent bilateral arrangement.   

India was hit with a 26 percent tariff in April, but is currently negotiating for relief. Meanwhile, China faces one of the steepest levies, with an effective tariff exceeding 55 percent, including a 25 percent pre-existing duty and an additional 30 percent imposed in June.   

Until August, Sri Lanka will continue under the 10 percent baseline tariff introduced in April.   

Duminda Hulangamuwa, Senior Economic Advisor to the President, clarified that the new 30 percent tariff would apply on top of existing duties on Sri Lankan exports to the US.   

The United States is one of Sri Lanka’s top export destinations, accounting for around US$3.0 to US$3.5 billion in annual exports, with apparel making up 70 percent, followed by rubber and rubber-based products.   

Asked whether the government had assessed the broader economic impact of the tariff on exports, employment, and foreign exchange flows, Central Bank Governor Dr. Nandalal Weerasinghe said no detailed study had yet been done, pointing to the temporary suspension of tariffs and the global nature of the issue.   

“Tariffs are expected to dampen global economic growth and push inflation higher, so Sri Lanka too will face some impact,” he said.   

Weerasinghe also dismissed suggestions that Sri Lanka made trade-offs to secure the reduced tariff, calling the outcome a result of “good faith negotiations.”   

“The discussions focused purely on reducing tariff and non-tariff barriers and expanding market access on both sides,” he said.   

He added that the tariff issue was raised during the IMF Mission in April and could be brought up again in future programme reviews, should it threaten Sri Lanka’s reform targets.   

Meanwhile, Trade Ministry Secretary K. A. Wimalenthirajah said Sri Lanka is drafting a National Tariff Policy and working to remove non-tariff barriers to enhance market access and export competitiveness.   

The officials asserted that diversifying markets and improving the ease of doing business remain critical priorities, regardless of the US tariff stance, to ensure the resilience of the country’s trade and investment landscape.