Sri Lanka braces for US reciprocal tariffs

Sri Lanka faces potential export headwinds as reciprocal tariffs imposed by the United States take effect today. Key sectors such as apparel and rubber products are particularly vulnerable.

 

The tariffs, which US President Donald Trump refers to as “Liberation Day” for US trade policy, were initially expected to target nations with persistent trade imbalances. However, Trump recently broadened the scope, applying them to all imports, although at lower levels than existing tariffs levied by those countries on U.S. goods.

 

Sri Lanka's government is yet to officially assess the full impact of the newly implemented tariffs. However, an analysis by the Institute of Policy Studies (IPS) indicates that the island nation's higher tariff regime compared to the U.S. leaves it exposed.

 

The IPS report, which simplifies reciprocity to import tariffs and para-tariffs, highlights that Sri Lanka's general customs duties, Export Development Board cess, excise duty, port and airport development levy, and social security contribution levy, when calculated on an ad valorem basis, generally exceed U.S. tariff rates.