Sri Lankan exporters remain in suspense as the United States’ 30% reciprocal tariff on imports from the country is set to take effect from August 1, with no official confirmation yet of any revised rate following ongoing negotiations in Washington.
The tariff, introduced under the US Trade Realignment Initiative, has triggered contrasting outcomes across the region. While Sri Lanka’s assigned rate remains one of the highest, several competitor nations have already secured concessions.
Vietnam has been assigned a 20% rate—among the lowest in the region—while Bangladesh, which initially faced a 35% tariff, is in the final stages of negotiations and is widely expected to secure a reduction after offering a package of trade and procurement deals to the US.
India has now been officially assigned a 25% tariff, following a formal announcement by President Trump on July 30. The rate will take effect from August 1, alongside additional trade-related penalties linked to strategic concerns.
Cambodia, meanwhile, is subject to a 36% tariff, with no indication yet of a successful renegotiation.
These developments reflect the US approach of setting baseline tariffs and inviting country-specific adjustments through bilateral bargaining.
A Sri Lankan trade delegation is currently in Washington for high-level discussions with the Office of the United States Trade Representative (USTR). As of July 30, however, no official update has been issued regarding any change to the 30% rate.
Speaking to media following a public event on July 29, Acting Finance Minister Dr. Anil Jayantha said the government had already presented its proposals to the United States and was awaiting feedback. “We previously reduced the rate from 44% to 30% through consistent dialogue. Talks are still ongoing, and we expect a response by the 1st,” he said.
Officials say they are pushing for parity with regional peers and hope to secure a concession before the deadline, but with just one day remaining, uncertainty continues to weigh on exporters.
The apparel sector—Sri Lanka’s largest export industry—is the most exposed. It accounts for nearly 40% of total exports and employs more than 300,000 workers, with the US being its largest single market. A 30% tariff would erode price competitiveness and may prompt global buyers to shift orders to countries with lower duties.
Growing concern in the export sector
Industry associations have warned that a delay or failure to secure a tariff reduction could lead to immediate disruptions. Apparel manufacturers in particular fear that once orders are redirected to competitors, it may take months to recover lost ground.
The International Monetary Fund (IMF), in its latest assessment, noted that around $3 billion in annual exports could be affected if the 30% tariff holds, and flagged the measure as a significant downside risk to Sri Lanka’s economic recovery.
With regional competitors like Vietnam and India already securing more favorable rates, Sri Lanka’s window to negotiate is rapidly closing. If no breakthrough is achieved in the coming hours, exporters could be left facing a sharp loss of market share and margins—especially in the US apparel segment, where pricing remains tight and alternatives are readily available. (NewsWire)