The Ministry of Finance announced today that the United States has reduced the proposed 12.5% additional tariff on Sri Lankan exports to a minimum of 10%, following Sri Lanka’s decision to ban the import of goods produced using forced labour.

According to the Ministry, the move is expected to deliver positive results for exporters, while reflecting Sri Lanka’s ongoing commitment to fair trade, responsible business practices, and internationally accepted labour standards.

Officials said the tariff adjustment will enhance the competitiveness of Sri Lankan exports in the US market, sending a strong signal to investors and buyers about the country’s dedication to sustainable economic reforms.

The Ministry added that the revision demonstrates Sri Lanka’s determination to build a modern, competitive trading environment that supports exporters and contributes to sustainable economic growth. (Newswire)

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The United States is set to impose new tariffs that could hit dozens of countries soon, trade envoy Jamieson Greer signalled on Tuesday (Jul 21), with President Donald Trump’s temporary global levies due to expire this week.

The Trump administration has prepared fresh tariffs targeting 60 trading partners over their alleged failures to act against forced labour, as officials push to rebuild the US leader’s trade agenda after legal setbacks.

“We expect to see some action soon,” Greer told CNBC when asked if new duties were incoming. He did not specify a timeline.

Trump imposed a 10 per cent global duty this year after a swath of his tariffs were struck down by the Supreme Court in February, but this levy expires on Friday.

Analysts expect that new tariffs over forced labour concerns – set between 10 per cent and 12.5 per cent – would replace these temporary duties.

They come as Trump makes a renewed push to use tariffs as leverage against US trading partners, sparking fears of retaliation and diplomatic tensions.

Washington announced a fresh 25 per cent duty on certain Brazilian goods last week, and on Monday unveiled a 50 per cent levy on many Canadian products to take effect in 30 days.

Canadian Prime Minister Mark Carney said Tuesday that he was looking at “all options”, adding that he and Trump had agreed to “intensify discussions” in the coming weeks on a possible deal.

On Tuesday, Trump announced a new 100 per cent sector-specific tariff on imported generic drugs to take effect from August 2028, with that level rising to 200 per cent in 2029.

For now, the US leader said the tariff on generic drugs would be cut to zero from August 2026, in an effort to build a window for the onshoring of such pharmaceutical production to the United States.

FORCED LABOUR CONCERNS

Greer said Tuesday that new action on forced labour will cover the majority of US trade, with the moves likely to reignite trade tensions.

A 10 per cent tariff rate would hit US imports from partners including Canada, the European Union, Mexico, Taiwan and the United Kingdom. They were found to have taken steps against forced labour.

Goods from over 40 other major economies like China, India and Japan face a 12.5 per cent levy.

The EU previously said that it considers tariffs imposed on these grounds “unjustified”. (CNA/ AFP)

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Sri Lanka has formally banned the import of goods produced using forced labour, effective July 10, 2026, in a move aimed at safeguarding exports from looming U.S. trade penalties.

The order was issued by President Anura Kumara Dissanayake, in his capacity as Minister of Finance, Procurement, and Economic Development. 

Under the new regulation, importers must submit documentation to the Director General of Customs certifying that their goods are produced free of forced labour.

This step comes against the backdrop of warnings from the Office of the United States Trade Representative (USTR), which recently identified Sri Lanka among 60 economies failing to impose or enforce prohibitions on forced‑labour imports. 

The USTR had proposed an additional 12.5% tariff on Sri Lankan exports to the U.S., a higher rate than competitors such as Bangladesh and Pakistan, which fall under a 10% duty.

The U.S. is Sri Lanka’s largest export market, accounting for about $3 billion in mostly apparel shipments. The apparel industry employs around 300,000 workers and reported $5 billion in exports last year, though shipments dipped 7.4% to $1.53 billion in the first four months of this year.

In response to the trade penalties, Deputy Finance Minister Anil Jayantha Fernando said Sri Lanka already maintains strong labour practices and a legal framework, but will tighten customs screening and adopt international standards to eliminate concerns over child and forced labour.

The country ratified the International Labour Organisation’s C190 convention in April, recognizing the universal right to work free from violence and harassment.

By banning forced‑labour imports, officials say Sri Lanka can avoid the additional U.S. tariffs and reinforce its commitment to ethical trade practices. (Newswire)

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