Revolution outside: Sri Lanka’s policy slumber

TEMU and Trump tariffs reveal the same underlying issue: decades of strategic neglect of trade, investment and industrial policy by successive Sri Lankan Governments.

- By Kusum Wijetilleke

The US recently imposed a 30% tariff on Sri Lankan exports, down from the 44% announced in March but still a significant threat to our export sector.

At the same time, local manufacturers are being undercut by ultra-cheap imports through platforms like Temu and AliExpress, which exploit an informal, per-kilogram customs clearance method according to Sanjay Samarasinghe of Aramex, who stated that this process was likely causing customs revenue losses of Rs. 35-50 million daily. P. Yasotharan of the Sri Lanka Brands Association describes the practice as "dumping," contributing to SME closures in garment hubs. The Government is moving to replace weightbased duties with itemised rates, but this response highlights a deeper problem: Sri Lanka lacks a coherent trade reform agenda, industrial strategy, and structural transformation plan. While countries like Vietnam and Malaysia integrated into global value chains through strategic state support, Sri Lanka remains stuck in a reactive, protectionist model.

In an 11 July statement, the Joint Apparel Association Forum (JAAF) warned the 30% tariff "threatens to erode competitiveness," noting that Vietnam had secured a 20% rate and Bangladesh, despite a 35% rate, is negotiating reductions. "We risk seeing a migration of US buyers," JAAF cautioned. Sri Lanka has offered no reciprocal reforms such as reducing para-tariffs or easing non-tariff barriers.

This reflects a broader failure: protectionism and tax holidays have long sheltered inefficiency without building competitive industries.