The US tariffs and Lanka’s weak-kneed response

Despite being a colony of the West, we continue to slavishly place our trust in these colonial powers and pay scarce heed to markets in Asia, the Middle East or Eastern Europe

During the past weeks the US began imposing unprecedented tariffs against all countries big and small. It cares not, what the fallout of its action would have on the countries concerned or on the global economy. The US has for example imposed a tariff of 44% on goods imported from Lanka. 

The 44% tariff is the fourth-highest tariff on an Asian country imposed by the United States. This is despite Lanka’s desperate situation of coming out of economic bankruptcy. Making a bad situation worse, the US is Sri Lanka’s largest trading partner. 

In January 2025, the United States accounted for approximately 23% of Lanka’s total merchandise exports, making it our largest export destination. This represents a substantial increase from January 2024. 

Apparel exports have become one of our largest exchange earners and the US our biggest market. After imposition of the new tariff our exports would become more expensive and could shift to countries with lower tariffs. The drop in revenue could put thousands of local apparel sector jobs at risk. It also means a huge drop in foreign exchange from this market.

To face this problem President Dissanayake has appointed a high-level delegation of officials who are expected to leave for the US next week to discuss the tariffs levied on our country. The committee is said to have submitted a report to the President on possible measures Lanka could take to offset the negative impact of increased US tariffs.

In an earlier era, we could perhaps have appealed to the World Trade Organization (WTO) against the sudden US action. Unfortunately in 2019, the US, because of its dissatisfaction with the WTO’s appellate body’s rulings, dismantled that body. We (Lanka) like all weak states are now left with nowhere and no one to turn to against unjust sudden tariff hikes 

As mentioned earlier, the US is Sri Lanka’s largest single-country apparel market, accounting for over 40% of the sector’s total exports, which exceeded USD 5.5 billion in 2023. This has been the Achilles heel of our marketing strategy. 

Despite being a colony of the West, we continue to slavishly place our trust in these colonial powers and pay scarce heed to markets in Asia, the Middle East or Eastern Europe.

India and China represent a significant portion of the world’s population, accounting for approximately 18.29% and 17.69% respectively -around 36 percent of the world’s population. India is estimated to have 1.463 billion people, making it the world’s most populous nation, while China has 1.416 billion. These two countries represent a huge market.

Yet, in January 2025 our trade with India represented less than 8 percent of our exports. While we exported a mere $31.8M to China, we imported $224M from that country resulting in a negative trade balance of $192M. Meanwhile in 2023, our exports to Russia amounted to US$146.42 million, representing approximately 1.07% of total exports.  

The oil-rich Middle East is another possible export market. Sadly in February 2025, exports to the entire Middle East countries (excluding Cyprus and Egypt) accounted for approximately 17.7% of our total merchandise exports. 

It is obvious that our country is not correctly targeting the best markets open to us. In the Middle East we continue angering the Arab states by openly supporting the US in its anti-Palestine stance. We even sent a naval craft to join the US fleet in its war against the Houthis of Lebanon who are engaged in a war to stop Israeli genocide in Palestine. 

Our present government has gone to the extent of even taking into custody, local citizens protesting Israeli genocide in Palestine. At the same time the regime offers protection to Israeli Chabads in our country. These Chabads openly speak of the need to eliminate Palestinians.

Outside of the US and the West there is an open and friendly market for goods and services our country could provide. But our lick-spittle government has apparently still not recognised the difference between who our friends and foes are.