Donald Trump’s 30% tariff on Sri Lankan exports sparks heated debate—while officials hail a negotiation win, critics warn of job losses, shrinking exports, and competitive disadvantages in global trade. Here’s what it means for the economy.
President Donald Trump has formally announced through a letter that a 30% tariff will be imposed on Sri Lankan exports to the United States starting August 1. This revised rate is a reduction from the earlier 44% tariff proposed in April, which had been suspended for 90 days. The 14% decrease is now at the center of political and economic debate in Sri Lanka over whether this is a success story or a setback.
In response to the announcement, President Anura Kumara Dissanayake convened a high-level meeting with his economic team at the Presidential Secretariat on July 10. Present were Dr. Anil Jayantha Fernando (Minister of Labour and Deputy Minister of Economic Development), Dr. Harshana Suriyapperuma (Secretary to the Ministry of Finance), Dr. Nandalal Weerasinghe (Governor of the Central Bank), K. A. Wimalenthirajah (Secretary to the Ministry of Trade), and Duminda Hulangamuwa (Senior Economic Advisor to the President).
Following the meeting, the key officials addressed a press conference. Dr. Suriyapperuma said the tariff reduction was achieved due to successful negotiations, with major input from the Sri Lankan expert panel, industrialists, and support from the United States Trade Representative (USTR). He noted that Sri Lanka is among the few countries to secure such a significant tariff reduction, and discussions will continue even after the new tariff goes into effect on August 1.
Dr. Nandalal Weerasinghe echoed these remarks, saying the reduction came through honest and detailed sector-based discussions. He added that more negotiations are underway to potentially reduce the rate further.
The team involved in the negotiations included Dr. Nandalal Weerasinghe, K. A. Wimalenthirajah, Duminda Hulangamuwa, and Sri Lanka’s Ambassador to the U.S., Mahinda Samarasinghe.
However, it was clarified that the 30% tariff would be applied in addition to the existing 10%, meaning the effective rate for many products would be 40%. According to Duminda Hulangamuwa, this layered approach increases the overall burden on exporters.
Rohan Masakorala, CEO of the Colombo Shippers’ Academy, explained that U.S. tariff structures vary by product. In the apparel sector, for example, existing rates range between 17% and 22%. With the additional 30%, some items could now face a 50% total tariff, posing a serious threat to Sri Lankan exporters.
Opposition Leader Sajith Premadasa reacted strongly on social media, calling the tariff a consequence of poor negotiation. He accused the government of sidelining experienced experts and claimed Sri Lanka now faces a $3 billion export deficit.
Dr. Harsha de Silva, former Deputy Minister of Economic Development, warned that the 30% rate, while lower than the original 44% may still be uncompetitive. With 350,000 direct jobs and 600,000 indirect jobs tied to the garment industry, Sri Lanka risks losing ground to regional competitors. He pointed out that Vietnam faces only 20% in tariffs, Bangladesh 35%, and India is in talks for better terms.
Masakorala emphasized that Sri Lanka’s production costs, high electricity, water, and labor costs, already disadvantage it. If India and Vietnam receive lower tariff rates, global investors will likely shift operations there, deeply affecting Sri Lanka’s apparel sector.
The original 44% tariff was based on an assumption that Sri Lanka levied an 88% tax on U.S. goods. Masakorala suggested the government must reduce its own import tariffs to unlock more favorable bilateral terms. However, Finance Secretary Dr. Suriyapperuma denied that Sri Lanka imposes an 88% tariff on American imports.
The stakes are high. The United States is Sri Lanka’s single largest export destination, accounting for 23% of total garment exports according to the Sri Lanka Export Development Board. The next highest, the United Kingdom, accounts for just 7.1%. This heavy reliance makes the U.S. tariff a make-or-break issue for the country’s export economy.
