Sri Lanka-US trade talks still on: Minister

• Foreign Affairs Minister Vijitha Herath says 95% of trade talks done, with negotiations still ongoing
• Notes Finance and Trade Ministries lead negotiations facilitated by Foreign Ministry

Foreign Affairs Minister Vijitha Herath yesterday said trade negotiations between Sri Lanka and the US are still ongoing, with around 95% of discussions already completed. 

Herath confirmed to the media that while substantial progress has been made, talks have not yet concluded, as Sri Lanka continues efforts to secure further tariff relief from the US.

He noted that the Foreign Ministry’s role has been limited to facilitating and coordinating discussions, with negotiations being led by the Finance Ministry in collaboration with the Trade Ministry and their US counterparts.

The talks follow a series of tariff decisions announced by the US in 2025. On 2 April 2025, US President Donald Trump imposed a 44% reciprocal tariff on Sri Lankan exports, citing calculations that alleged Sri Lanka imposed tariffs of up to 88% on US goods. The implementation of the measure was subsequently delayed by 90 days. 

Following multiple discussions, in July 2025, the reciprocal tariff was reduced to 30% and later further eased to 20% in August 2025.

Despite the reduction, the Government has continued engagements with US authorities in an effort to obtain additional concessions, given the potential impact on key export sectors such as apparel and rubber.

In December 2025, visiting US Under Secretary of State for Political Affairs Allison Hooker conveyed to President Anura Kumara Dissanayake that the US has renewed its focus on restarting tariff negotiations with Sri Lanka. 

During the meeting, Hooker reaffirmed Washington’s readiness to support Sri Lanka’s post-Ditwah recovery and expressed US support for expanding tourism flows, strengthening trade and maritime cooperation, and assisting Sri Lanka’s efforts to combat drug-related challenges.

Concerns over the economic impact of US tariffs have been echoed by multilateral agencies. In October 2025, the Asian Development Bank (ADB) warned that Sri Lanka’s recovery could face renewed pressure in 2026 as higher US tariffs on apparel and rubber exports begin to take effect. While economic growth in 2024 and 2025 is expected to remain at around 3.9%, supported by manufacturing, construction, and services, the ADB projects growth to slow to about 3.3% in 2026 amid weakening external demand and potential job losses.

The ADB also noted that US tariff rates have risen to their highest levels since the 1930s, significantly increasing Sri Lanka’s effective tariff burden. 

Separately, the Institute of Policy Studies (IPS) estimated that the current 20% reciprocal tariff could reduce Sri Lanka’s export earnings by $ 634 million and put nearly 16,000 jobs in the apparel sector at risk.

The ADB cautioned that risks to Sri Lanka’s outlook remain elevated, citing ongoing trade policy uncertainty, energy price volatility, exposure to remittance flows from the Middle East, soft global demand, and domestic weather-related disruptions.

In December 2025, US-based Newsweek also published an interview with President Dissanayake, in which he said Sri Lanka is seeking improved market access, climate financing, and technology partnerships with the US. “What we offer the US is a strategically placed, stable, democratic partner in the Indo-Pacific,” the President said.