Sri Lanka is one of seven countries to have received a letter from the US administration about the imposition of tariffs on its imports from August 1.
The letter, addressed to the country’s President, Anura Kumara Dissanayake, stated that the tariff on Sri Lanka would be 30 per cent.
The Sri Lankan Ministry of Finance’s Secretary, Harshana Suriyapperuma, responded with his government’s decision to “continue to engage and assess the situation”, drawing sharp criticism from the opposition, with the Leader of Opposition, Sajith Premadasa, saying the new tariff was the “price we pay for poor negotiations”.
Suriyapperuma, meanwhile, insisted they would get inputs from relevant stakeholders while they engaged with the US for a “mutually beneficial” outcome on tariffs.
“Our approach is to make use of this space to the best possible advantage of Sri Lanka and to have a mutually beneficial outcome both for the US and for Sri Lanka as well,” he said.
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The country’s Central Bank Governor, Nandalal Weerasinghe, also addressed a media briefing and claimed to have “made significant progress so far”.
“Obviously, we want to make more progress going forward. We continue to engage with an intention to have a better solution going forward for Sri Lanka,” he added.
Sri Lanka has held two rounds of talks with the US to negotiate the new tariff, which analysts say would endanger 50,000 jobs in the export sector.
Talal Rafi, a renowned economist, said that the 30 per cent tariff would be a hard hit to the local economy, adding that Sri Lanka should have agreed to reduce the tariffs on US exports.
“Vietnam has got away with only 20 per cent because they agreed to eliminate duties on American goods,” Rafi said.
Analysts concede that Sri Lanka’s current 30 per cent tariff is a drop from the 44 per cent proposed in April, the sharpest reduction among the countries targeted by the Trump administration. Colombo charges Washington 88 per cent for imports to the island nation.
Sri Lanka’s annual exports to the US were valued at USD 3 billion.
The US’s tariff announcement is part of its broader policy of correcting its trade imbalances globally.
In its letters to 14 countries this week, new tariff rates were mentioned along with the renewed deadline of August 1. Only tariffs for Indonesia and Thailand, both countries being Sri Lanka’s competitors for rubber exports to the US, remained unchanged at 32 and 36 per cent respectively.
Island nation's garment sector gets boost from the UK
On Friday, the UK government announced tariff-free import of garments manufactured in Sri Lanka, helping ease some of the country's woes after the US government sent a letter saying 30 per cent tariff would be levied on Sri Lankan goods from August 1.
The announcement comes as the UK government launched on Thursday its liberalised rules of origin that will benefit developing countries.
“This is a win for the Sri Lankan garment sector and for UK consumers,” said British High Commissioner in Colombo, Andrew Patrick.
The UK is Sri Lanka’s second largest export market after the US.
Meanwhile, reacting to US President Donald Trump's tariff of 30 per cent, the country’s largest trade chamber said the high tariff would jeopardise thousands of jobs. It urged the government to pursue further negotiations with the US for a better outcome.
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