In a significant development for Sri Lankan exporters, the United States has officially confirmed that Sri Lanka’s reciprocal tariff rate will be 20% — reduced from the previously imposed 30% under Executive Order 14257.

The announcement was made via a presidential order issued on July 31, following months of negotiations with U.S. trade authorities. Sri Lanka was listed among a group of countries that secured improved rates after offering what the U.S. described as “meaningful trade and security commitments.”

According to the order, the revised rates will take effect seven days after its issuance — on August 7, 2025— with exemptions for goods already in transit prior to that date.

Sri Lanka now joins regional competitors like Vietnam (20%), Bangladesh (20%), and India (25%) with reduced tariff rates. Notably, Pakistan and Indonesia secured slightly lower rates (19%), which could offer marginal competitive advantages in specific product categories.

However, the executive order also introduces stringent anti-transshipment measures, including a 40% duty on any goods found to be rerouted to evade tariffs. Apparel exporters in Sri Lanka — many of whom ship via third countries — will need to ensure strict compliance with U.S. customs protocols. (Newswire) 

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Pakistan has signed a trade agreement with the United States on Thursday, July 31, Reuters reported, citing the Pakistan Government.

The statement, according to Reuters, stated that the trade agreement will result in a reduction of reciprocal tariffs, especially on Pakistani exports to the US.

Pakistan was earlier hit with a 29% reciprocal tariff in April. However, the statement does not clarify what the tariff rate will be reduced to.

The trade deal is expected to spur increased U.S. Investment in Pakistan’s infrastructure and development projects, Reuters reported quoting the statement.

“We have just concluded a Deal with the Country of Pakistan, whereby Pakistan and the United States will work together on developing their massive Oil Reserves. We are in the process of choosing the Oil Company that will lead this Partnership. Who knows, maybe they’ll be selling Oil to India some day!” Donald Trump wrote on Truth Social.

The US President has time and again referred to the fact that he was the one who brokered a ceasefire between India and Pakistan in May, which the government has gone on to deny. (CNBC)

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Deputy Minister of Economic Development, Anil Jayantha Fernando, says Sri Lanka intends to continue discussions with the US authorities until the 01 August deadline to further reduce the revised trade tariffs. 

Briefing the Parliament on the current situation, Anil Jayantha Fernando said that the United States has sent courtesy letters stating that the revised trade tariffs will come into effect from 01 August.

He further said that in its courtesy letter, the US government says that a 30% tax will be levied on Sri Lankan exports if Sri Lanka fails to enter into a bilateral trade agreement before August 1.

“Sri Lanka is one country that has received this letter. Among the letters sent to 25 countries, Sri Lanka is the nation that has received the highest concession. We intend to continue talks until the 1st August deadline and attempt to further reduce the tariffs,” he said. 

Anil Jayantha Fernando further revealed that upon the initial imposition of trade tariffs by the US, Sri Lanka immediately appointed a committee and commenced negotiations with the US authorities. 

“On two occasions, Sri Lankan delegations visited the US for direct talks with the US Trade Office officials. The reduction from 44% to 30% trade tariffs is an outcome of these negotiations,” he said.

Deputy Minister of Economic Development, Anil Jayantha Fernando, added that Sri Lanka will continue discussions with the US authorities to facilitate a further reduction of the imposed trade tariffs. (Newswire)

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U.S. President Donald Trump has reposted his formal letter to Sri Lankan President Anura Kumara Dissanayake, correcting an earlier version in which the President’s first name was misspelled as “Aruna.”

The revised letter, dated July 9, 2025, reaffirms the United States’ intention to proceed with a 30% tariff on Sri Lankan exports beginning August 1, citing longstanding trade imbalances caused by what Trump described as “very persistent” tariff and non-tariff barriers.

Despite the tough rhetoric, Trump called the letter a “great honor,” expressing willingness to work with President Dissanayake on improving bilateral trade relations. He invited Sri Lanka to participate in what he called “the extraordinary economy of the United States,” noting that tariffs could be adjusted if Sri Lanka eliminates its own trade barriers.

“We look forward to working with you as your Trading Partner for many years to come,” Trump wrote in closing, adding, “You will never be disappointed with the United States of America.” (Newswire)

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