Govt. engages in urgent tariff talks as US seeks trade deficit solutions

Tuesday, 8 April 2025 03:41 - - {{hitsCtrl.values.hits}}

In the wake of the US’s announcement of a 44% reciprocal tariff on Sri Lankan exports, the Government yesterday confirmed that Washington has officially requested to propose ways to reduce its trade deficit with the US, prompting immediate diplomatic and economic engagement between the two countries.

Speaking at a media briefing, Economic Development Deputy Minister Prof. Anil Jayantha Fernando and Finance and Planning Deputy Minister Dr. Harshana Suriyapperuma disclosed ongoing efforts to respond to the situation, with both emphasising that a strategy is rapidly taking shape to navigate the challenge.

Prof. Fernando said the US communicated its expectations for concrete proposals to reduce the bilateral trade gap, which currently stands heavily in Sri Lanka’s favour.

“We are exploring the best strategies, including revising our existing tariff structure. A committee has already been appointed and is working around the clock to prepare proposals,” he said, adding that these developments would be transparently communicated as they evolve.

Sri Lanka was imposed with a 44% reciprocal tariff, primarily due to the barriers and import tariffs imposed on US imports by Sri Lanka, which has been estimated to be at 88%.

The US remains the largest export market for Sri Lanka, accounting for 27% or $ 3 billion of total manufactured exports $ 12.8 billion as of 2024. Apparel and textile exports accounted for 64% of the total exports to the US.

Despite the 44% tariff set to take effect tomorrow (9), Sri Lanka was not listed among the so-called “Dirty 15” countries facing even harsher tariff regimes. This, officials argue, leaves room for diplomacy and negotiation.

“This is a national issue. We are mobilising every available channel – diplomatic, policy, and commercial – to ensure that Sri Lanka is not unfairly disadvantaged and that our economic recovery stays on track,” Prof. Fernando said.

Dr. Suriyapperuma noted that preliminary discussions with the US regional delegation were held ahead of the official tariff announcement.

“Although we have a trade deficit from the US perspective, its value is not as significant as others. This context was taken into account during our early dialogues,” he added.

In response to the formal announcement, a high-level virtual meeting was arranged between Sri Lankan officials and senior US administrative representatives, lasting nearly an hour.

During this conversation, Sri Lanka highlighted its economic recovery efforts under the International Monetary Fund (IMF) Extended Fund Facility (EFF) and reiterated its commitment to revenue growth and structural reforms.

“The US clarified during this call that Sri Lanka will face only the 44% tariff and not an additional 10% baseline duty as initially feared,” Dr. Suriyapperuma stated.

He described the situation as fluid and evolving, noting that another round of discussions is already in the works, with Sri Lanka having proposed a date and now awaiting confirmation from Washington.

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