US tariffs on SL could cost SL $ 634 m export loss, nearly 16,000 job cuts

ECONOMIC think tank Institute of Policy (IPS) yesterday warned that the 20% reciprocal tariff unilaterally imposed by the Trump administration could lead to export losses of $ 634 million and put nearly 16,000 jobs at risk, mostly female workers in the apparel industry.

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When the US announced the new tariff rate on 31 July, most business chambers in Sri Lanka welcomed the move because it meant a further reduction from an earlier 44% rate.

However, even at 20%, the adverse impact is significant.

A new study by the IPS released yesterday pointed out that although the 20% tariff rate offers Sri Lanka some relief compared to previous reciprocal rates, the US effective tariff rate for Sri Lanka remains high.

The latest US tariff announcement raises the effective rate to 29.9%, the highest since 1935.

"With a quarter of Sri Lanka's total exports facing at least a 20-percentage-point increase in tariffs, the trade-weighted effective tariff rate will be 29.9%, compared to 10.20% in April 2025. Sri Lanka's main exports to the US, apparel and rubber products, will face tariffs of 36.8% and 20.2%, respectively," IPS Research Fellow Dr. Asanka Wijesinghe said.