How U.S. tariffs and a fragile rupee are exposing Sri Lanka’s export vulnerabilities

As Sri Lanka navigates the delicate path of economic recovery, two mounting challenges have converged to expose deep-rooted vulnerabilities in its export economy: the appreciation of the rupee over the past two years and a fresh wave of reciprocal tariffs imposed by the United States.

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For a country where nearly a quarter of exports are US-bound, these developments carry serious implications—not just for revenue, but for investment, competitiveness, and long-term growth.

According to leading economist Prof. Sirimal Abeyratne, these pressures should be seen less as external shocks and more as symptoms of underlying structural gaps. “The problem isn’t just what Trump did,” he explains. “It’s the fact that Sri Lanka has been running an overly protective and inefficient trade regime for decades. What this tariff move has done is hold a mirror up to our own weaknesses.”