Shakespeares Ides of March, Trump’s tariffs and Modi’s visit

As April dawns, Lanka is faced with an Ides of March situation. US President Trump has imposed a 44% tax on Lankan exports to the US. To-worse, the US is the largest export market for Lanka. In 2024, Lanka exported nearly US$ 3 billion in goods to the US. The steep increase in tariffs could have grave consequences for our fragile economy, as Lanka could lose our goods becoming noncompetitive in the US market and result in a sharp drop in income.

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In 2023, Lanka exported approximately $2.98 billion worth of goods to the United States. Key exports included women’s undergarments (S 455 million), tea ($1.4 billion) and precious stones ($196 million). Trump’s unexpected move is akin to a terrorist attack on our economy, still teetering from the after-effects of the economic bankruptcy of 2022.

The increase in tariffs could throw thousands of local workers, especially in the apparel trade, out of employment when the rise in prices (following enhanced tariffs) leads to a drop in demand for Lankan goods.

It was in this backdrop that Premier Modi’s arrival in the country yesterday takes on an even greater significance. India, during our economic crisis of 2022, played a huge role in helping our country avert economic collapse. It also enabled the extension of credit line US$ 4 billion dollars at a time all other financial institutions blacklisted the country. The IMF 4-year Extended Fund Facility (EFF) arrangement came long after we received the Indian credit line.