Killing Sri Lanka’s Golden Goose: Exporters’ dilemma

Our trade negotiators need to be smarter, crafting a deal attractive more than what is offered by others and perceived better to the US.

- By Saminda Weerasinghe, CFA

THE newly imposed 30% US reciprocal tariff on Sri Lankan exports (on top of the applicable tariffs on specific HS codes) has become a major concern. This situation underscores the critical need to model for uncertainty within a broader global context. If these new tariff structures persist, their wide-ranging negative impact on the world economy-especially the US would have multiple repercussions: harming the US economy, weakening the dollar's status as the reserve currency, disrupting world trade, and accelerating a global economic slowdown will be substantial.

This Should geopolitical tensions rise concurrently, the situation could become chaotic, driving up energy prices and triggering stagflation that impacts secondary sectors like global tourism and remittance flows. Vulnerable economies like Sri Lanka would be affected. While it may be too early to quantify these risks precisely, we cannot afford to overlook them.

Policymakers must prioritise protecting our export sector (both merchandise and services) as a whole, especially SME exporters. This is not to diminish other sectors, but to spotlight that a thriving export community coupled with intelligent policy will be Sri Lanka's "saving grace."

The false sense of achievement regarding the current tariff rate