Impact of President Trump’s New Tariff on Sri Lankan Exports A Preliminary Analysis

When President Donald Trump announced his new reciprocal tariffs in April, he identified a group of countries as “worst offenders” with unfair trade policies. And Sri Lanka was almost on the top of that list with 44% additional ad valorem duty, which would have had a devastating impact on Sri Lanka’s exports and the economy.

- BY GoMI SENADHIRA

Fortunately, the government has very discreetly managed to negotiate a reduction of this additional ad valorem duty to 20%, which compares well with those imposed on other countries in the region.

How will this new 20% additional ad valorem duty impact the competitiveness of Sri Lankan exports in the U.S. market?

Competitiveness in the U.S. market

Regrettably, even prior to President Trump's election for his second term, Sri Lanka was gradually losing its competitiveness in the U.S. market. In fact, Sri Lanka had not performed well in that market during the last two decades, and America’s imports from Sri Lanka had remained almost stagnant since 2015. Compared to this, as illustrated in the table below, exports from most other Asian countries increased manifold during this period, while the imports from China decreased substantially. (See Table)