Sri Lanka is yet to reach any final agreement to be inked with the US on reciprocal tariffs, and discussions are still underway regarding the matter, Foreign Minister Vijitha Herath said. He said that SL and the US have had 17 rounds of discussions so far.
Partial Tariff Relief Already Secured
The Minister said SL was able to get the tariffs reduced from 44% to 20% through discussions and added that the US Prez Donald Trump, in an order issued on Nov 13, brought some food items exported by SL to zero tariff.
Trade Imbalance at the Core of US Demands
In 2024, Sri Lanka exported around US$ 3 billion mainly garments and rubber goods to the US, while imports from America amounted to just US$ 370 million. Bridging this imbalance has become central to US demands.
Officials close to the talks say the US team is pressing for market access in machinery, agriculture, and consumer goods, sectors where Sri Lanka’s local producers already struggle.
Structural Weaknesses in Sri Lanka’s Export Strategy
Economists warn that meeting such commitments without a broader strategy could weaken domestic industries and aggravate the very vulnerabilities that plunged the country into crisis in 2022.
University of Colombo economist and Central Bank Monetary Policy Board member Prof. Priyanga Dunusinghe cautioned that Sri Lanka’s approach has been narrowly limited to tariff negotiations.
“Export diversification has not progressed, the business environment remains weak, and productivity has not improved, leaving Sri Lanka exposed to external shocks like the recent US tariff hike,” he said at the CEO Forum 2025.
A recent Institute of Policy Studies (IPS) study has already projected losses of US$ 634 million in export earnings under the new tariff regime, highlighting the heavy toll on apparel the single largest contributor to exports. Yet despite these risks, Colombo has yet to move beyond ad hoc bargaining.
The global context makes the challenge sharper. Washington’s new protectionism targets goods trade deficits while excluding services, where Sri Lanka depends heavily on US technology flows.
This tactic reflects wider apprehensions about Asia’s rise, with China, India, and Indonesia are to be among the uppermost global economies by 2030. The situation is gradually hostile for small countries without geopolitical leverage,
Prof. Dunusinghe gave the example of Singapore as a good counter-factual. Within weeks of the US tariff action, it had rolled out a five-pillar strategy building competitiveness, driving innovation, re-skilling the workforce, supporting transitioning industries, and developing linkages with open-trade nations.
“Sri Lanka has not moved beyond talks on tariff concessions. Heavy dependence on apparel exports continues, and no systematic reforms have been implemented to expand products or markets,” he warned.
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