
With the clock ticking on a critical trade deadline, Sri Lanka stands on the brink of a major export crisis. The US is poised to re-impose a 44% tariff on key Sri Lankan goods, and no agreement has been reached. Here’s how this impacts the country’s economy and global competitiveness.
Sri Lanka is on the edge of a trade crisis as the United States prepares to re-impose a steep 44% tariff on exports, with only six days remaining before the grace period expires. Despite early promises of a resolution, no formal agreement or joint statement has been released between the Sri Lankan and US governments, raising alarms across the country’s key export sectors.
These tariffs, originally introduced during former US President Donald Trump’s administration, were paused temporarily for a three-month review. However, with that grace period now nearing its end, Sri Lankan exporters face the renewed threat of heavy taxation especially in industries such as garments, tea, and rubber, which are heavily reliant on the US market.
Without a finalized deal, Sri Lankan goods will face diminished competitiveness in the US, risking significant declines in export revenue and potentially derailing economic recovery efforts. The stakes are especially high given the current global economic uncertainty and the country’s ongoing debt obligations.
In contrast, other Asian nations such as Vietnam, India, China, and Bangladesh have already secured favorable agreements with Washington to cushion the blow of these tariffs. Their timely negotiations have left Sri Lanka in a disadvantaged position, exposing it to a heavier tax burden and trade isolation.
The Sri Lankan government, led by President Anura Kumara Dissanayake, initiated talks with the US and earlier pledged that a joint statement would be released within two weeks. But with the grace period about to expire, that assurance remains unfulfilled. The absence of any clear progress raises doubts about the effectiveness of Sri Lanka’s negotiation strategy.
According to officials, discussions are ongoing behind the scenes. However, there has been no indication that the US is willing to extend the grace period or revise the tariff structure in Sri Lanka’s favor. This silence is feeding concerns among local businesses and international observers.
The potential reinstatement of the 44% tariff could be devastating for Sri Lanka’s garment industry, which is one of the country’s largest employers and foreign exchange earners. Tea and rubber exports, already facing global competition, could also suffer a steep decline in demand from US buyers.
Economists warn that if the government fails to reach a timely agreement, the ripple effect could extend beyond lost revenue to job losses, reduced foreign investment, and further strain on the national budget.
For now, all eyes are on whether the Sri Lankan government can deliver a breakthrough before the deadline. As the window narrows, businesses, exporters, and the public brace for impact.