ECONOMYNEXT – Sri Lanka is expected to hit hard by U.S. President Donald Trump’s reciprocal tariff with export sector which has more than 300,00 0 labour force is expected to face adverse impacts.
Hear the comments from Sri Lankan researchers and stake holders in the export industry over Trump’s 44 percent tariff for Sri Lankan products.
Rohan Masakorala, CEO, Shippers Academy, Colombo
“There was information of a possible tariff hike on March 5. But nobody was preparing for that. Everybody is surprised today.”
“The main reason for this is our past bad economic governance. There is lack of openness and liberalisation in the economy. The Trump’s decision is going to affect investments into Sri Lanka, current and future exports from the country, and diversification of exports.”
“There has been no standard tax policies and obviously we have been a bad boy for the U.S. We don’t see multiply effect of economic policies and I don’t think we can change many things through negotiations at this juncture.”
“Government officials said Sri Lanka is under the radar and there won’t be impact to Sri Lanka from Trump’s tariff policy. Some even said Sri Lanka could be benefiting from such a move and others said Trump may not even know about Sri Lanka.”
Anushka Wijesinghe, Economist
“If Sri Lankan trade and foreign ministries authorities believe that negotiations/discussions with the US can be just on “tariffs” – they are in for a rude shock.”
“Close read of USTR note reveals much about the economic ideology of the US admin on how it views international and bilateral trade and hints to Sri Lanka how we should approach our strategic discussions with the US. It’ll have to broader – focus on non-tariff measures (NTM), para-tariffs, trade facilitation, etc. Perhaps even non-trade aspects like digital services tax.”
“But SL – unlike India – hadn’t got prepared to make some concessions and signal intent already. In the run up to today, India had already promised reducing tariffs on imports of high-end bikes and bourbon from US, while committing to reconsider a digital services tax.”
Anil Jayantha, Deputy Economic Development Minister
“This is not something specific to Sri Lanka. They have done this for all the countries they do trade. As a common policy, they have raised the tariff for the imports from those countries which have a negative trade balance.”
“As per US reports, they have calculated that they pay an import tax on goods of 88 percent to Sri Lanka. They have imposed 50 percent of that as the tariff for Sri Lanka goods. This has been the same with the other countries.”
“There is a false narrative in the society that this is only impacting Sri Lanka and we did not negotiate it. It’s totally wrong. Before this decision, we held discussions with respective institutions, understood the situation, and we were in the process of discussing the measures we should take at ministerial level if there is a tariff hike. But we can’t resist the US policy decision.”
“What we have to do is to discuss on the current situation. Already we have exchanged our views with the US. The new measure will be implemented from April 9. Before that, we are trying to see the possibility of reduce this amount as our country is in a special position. Though we have a favourable trade balance with the US, we are in an IMF programme and we are in the process of stabilizing the country from an economic crisis. So because of the Sri Lanka is in a peculiar position, we have a space to clarify on this. We have to clarify this with their policies.”
“The impact could be on the export of apparel and foods. The competitiveness could be reduced because of the higher tariff which could lead to lower demand.”
“We also have alternative like GSP plus. Also all of us know that we have an issue with our tariff system which has a number of complexities. We have to discuss about that and simplify that.”
“What we expect is to move forward with the US on a trade and investment policy after discussions.”
Yohan Lawrence, Secretary General of the Joint Apparel Association Forum (JAAF):
“Sri Lanka could very quickly see its share of US business move to countries with lower tariffs than Sri Lanka has.”.
“With tariffs coming into effect almost immediately, the impact will be swift and severe. Potentially, we could see the bulk of our U.S. business migrate to competitor markets. This volume of business simply cannot be replaced through other markets.”
“The Government of Sri Lanka has already initiated consultations with the industry and other stakeholders to determine an appropriate course of action.”
“We are very appreciative of the immediate actions taken by the Government to discuss this situation are working very closely with the authorities to see how best we could address the concerns raised by the US Government, whilst staying within the limitations of Sri Lanka’s ongoing IMF programme.”
“Despite this challenge, the apparel sector remains committed to transparency, ethical production, and sustainable value creation.”
“Our focus now is on engagement, agility, and ensuring Sri Lanka remains a trusted sourcing destination. However, this situation is serious, and it must be addressed as a matter of national urgency.”
Isthihar Imamudeen, Chairman, Moon Lanka Garment, a small-size government:
“We serve as an outsourcing firm for some leading exporters in their supply chain. One of the key garment exporters has asked us to reduce the cost by 35-40 percent because of the US tariff hike.”
“We have a very thin margin in production. I am not sure how we are going to reduce the cost. We can’t go for cheap materials because exporters always demand the highest quality for U.S. buyers.”
(Colombo/April 03/2025)
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