Strategic pathways for Sri Lanka – navigating US reciprocal tariff regime: Part 2

WITH the enactment of the US Executive Order on Reciprocal Tariffs – unveiled on 2 April 2025 – Sri Lanka finds itself among the nations most heavily impacted, facing an 44% ad valorem duty on all goods exported to the US.

- By Michael Jayawardana

The first part of this article series provided a comprehensive breakdown of the rationale, rationale, and structure of this policy. It examined how countries were tiered and how Sri Lanka’s effective trade burden was assessed at 44%, culminating in its current tariff status.

Part 2 shifts focus from the cause and effect to the course of action. It evaluates the steps Sri Lanka can take to mitigate the economic fallout, adjust its trade orientation, and leverage this moment as a turning point for reform. Encouragingly, the Sri Lankan Government has already initiated concrete and timely action. These include launching diplomatic engagements and appointing a high-level committee to assess and respond to the challenge. While the situation is serious, it is far from insurmountable.

This article outlines short-term, medium-term, and long-term strategies for Sri Lanka for identification and resilience. The tone is intentionally constructive because the present disruption, if managed skillfully, can also become a catalyst for transformation.

1.Immediate response: Structured engagement and policy alignment

In response to the US Executive Order, the Sri Lankan Government acted promptly by initiating a coordinated national response.

On 3 April 2025, President Anura Kumara Dissanayake appointed a high-level committee tasked with assessing the implications of the reciprocal tariffs and advising on mitigation strategies. This committee includes senior officials from key economic institutions such as the Ministry of Finance, Central Bank, BOI, EDB, and Foreign Ministry, alongside representatives from the private sector and academia. Its scope covers a full-sectoral impact assessment and the formulation of a national action plan.