Impact of US reciprocal tariffs and strategic responses from affected nations

In a controversial move on 2 April 2025, President Donald Trump announced the imposition of reciprocal tariffs on imports from approximately 80 countries, again sending shockwaves through the global trade landscape. These tariffs, which exceed a 10% across-the-board tax on all imports to the United States, are designed to address the US’s trade deficit with several major trading partners, including China and the European Union. Trump termed the announcement as “Liberation Day,” asserting that these tariffs were necessary to “rectify the imbalance in trade.”

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The principle behind these tariffs, referred to as “reciprocal,” involves imposing matching tariffs to those other countries place on US imports. In President Trump’s words, “They do it to us, and we do it to them.” Under this policy, Asian nations, in particular, are expected to bear the heaviest burden. Cambodia, for example, faces a tariff rate of 46%, Vietnam is subject to a 44% levy, and Sri Lanka faces a 14% levy. Additionally, China’s imports will be taxed at an overall rate exceeding 60%, factoring in both the reciprocal tariffs and previously announced duties. Despite the considerable disruption these measures could cause, some analysts suggest that these tariffs may be part of a broader negotiating strategy aimed at compelling foreign governments to agree to more favourable trade deals with the United States. Some economists even mentioned that “The president loves creating a situation where other countries or individuals have to come and bargain with him. By setting out different tariff rates on a country-by-country basis, it creates a situation where every country then has to supplicate and beg and negotiate with the White House on an individual basis.”

Potential impact on Sri Lanka