- $ 3 b of exports to Sri Lanka’s largest market under threat due to high 44% new reciprocal tariff declared by US President Donald Trump from 9 April
- Sri Lanka figures among top 3 countries with highest reciprocal tariffs and most impacted in South Asia
- Major blow for apparel and textiles, rubber and industrial products, agriculture and food; and logistics and shipping
- Colombo stock market dips by over 2% as investors react negatively to Trump’s tariff move
US President Donald Trump’s decision to slap a high 44% tariff on Sri Lankan products yesterday terrorised the country’s private sector and analysts who issued severe warnings prompting the Government to take immediate action.
On 2 April, Trump announced a minimum of 10% reciprocal tariff on all imports to the USA effective from 9 April 2025. These new reciprocal tariffs are set to be implemented in addition to the tariffs already signed by Donald Trump in March 2025.
Accordingly, Sri Lanka was imposed with a 44% reciprocal tariff, primarily due to the barriers and import tariffs imposed on USA imports by Sri Lanka has been estimated to be at 88%. The USA remains the largest export market for Sri Lanka, accounting for 27% ($ 3 billion) of the total manufactured exports ($ 12.8 billion) as of 2024.
Out of which Textile and Apparel exports accounted for 64% of the total exports to the USA. The significant tariff was due to the trade imbalance between Sri Lanka and the USA, which accounted for a trade deficit of $ 2.6 billion as of 2024. Through this implementation, Sri Lanka finds its way into the top 10 highest countries with reciprocal tariffs. Sri Lanka was also the highest affected in the South Asian region, whereas neighbouring countries like India and Bangladesh were imposed with tariffs of 27% and 37%, respectively, depicting a competitive disadvantage of Sri Lankan exports to the USA.
The Ceylon Chamber of Commerce yesterday expressed deep concern over the impact from Trump’s move and suggested immediate action. Biggest victim, the apparel industry too expressed concern.
On his part, President Anura Kumara Disanayake got cracking yesterday itself to deal with the threat posed by Trump’s move appointing in the morning a top level committee to assess the impact and suggest remedial action and chairing a meeting later in the evening.
Economic analyst Michael Jayawardana in a special report said the short-term pain for sectors like apparel, rubber, and tea is acute, factories may slow or shutter, jobs are at risk, and foreign exchange earnings could dwindle. According to him sectors directly impacted include apparel and textiles, rubber and industrial products, agriculture and food; and logistics and shipping.
The Colombo stock market slipped by over 2% as investors reacted negatively to Trump’s tariff move. CT CLSA Securities said companies such as MGT, TJL, HAYL, DIPD, HAYC, and HELA are expected to be affected by the tariff revision due to their significant exposure to the USA market.