Economists action plan on US tariffs

SRI Lanka exported $ 3 billion to the United States last year—nearly a quarter of our total exports.

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These exports, and the jobs they support, will be at serious risk if recently announced US tariffs come into effect. Production is likely to shift to countries facing lower tariff hikes, such as India, Kenya, and Egypt.

In response, the Sri Lankan Government will present a plan to reduce the country’s effective tariff rate. This is welcome. It is well understood that a tax on imports is a tax on exports. For nearly two decades, Sri Lankan exporters have been weighed down by exceptionally high import tariffs. This marks a sharp break from the 1990s, when our average tariff rates were comparable to Indonesia, Malaysia, and the Philippines—and lower than China, Thailand, and Vietnam. Unsurprisingly, this was when Sri Lanka’s exports were at their peak: our share of world exports reached its highest point at the dawn of the new millennium. Even then, benchmarking against large Asian economies isn’t good enough. As a small economy aspiring to be the Indian Ocean’s trading hub, we should, in the first instance, benchmark our tariffs to the UAE, Singapore and Hong Kong.