Sri Lanka’s export recovery faces fresh uncertainty following a sweeping trade warning issued by US President Donald Trump, which could expose Sri Lankan exports to an additional 25 percent tariff due to the country’s trade links with Iran.
Arutha Research Policy Think Tank said Iran remains one of the top ten buyers of Sri Lankan tea, importing around 9,800 metric tonnes every month, making it a significant market for the island’s key agricultural export
At the same time, the United States is Sri Lanka’s single largest export destination, accounting for about 25 percent of total exports and generating nearly US dollars 3 billion in annual export revenue. Arutha Research warned that any new tariffs imposed by Washington could have a serious impact on Sri Lanka’s export earnings and competitiveness.
The concern follows a strong statement by Donald Trump, who announced that any country doing business with Islamic Republic of Iran would face a 25 percent tariff on all trade with the United States of America.
“Effective immediately, any country doing business with the Islamic Republic of Iran will pay a tariff of 25 percent on any and all business being done with the United States of America. This order is final and conclusive,” Trump said.
Arutha Research noted that Sri Lanka is already subject to a 20 percent tariff on exports to the US, which was negotiated following Trump’s ‘Liberation Day’ tariff shock announced in April 2025. The addition of a further 25 percent tariff would significantly raise the cost of Sri Lankan goods for American consumers, potentially reducing demand and hurting exporters.
The think tank cautioned that such a move could undermine Sri Lanka’s fragile economic recovery and limit its ability to trade freely with global markets, particularly at a time when export growth is seen as critical to sustaining economic stability.
Arutha Research said policymakers and exporters would need to closely monitor developments and assess potential risks to Sri Lanka’s trade relationships amid escalating geopolitical and trade tensions. (Newswire)
