Sri Lanka eyes stronger US trade ties

• Sri Lanka secures US tariff reduction to 20%, down from initial 44%
• Tariff cut brings Sri Lankan exports on par with Bangladesh and Vietnam, especially in apparel
• Treasury Secretary Dr. Harshana Suriyapperuma says result places Sri Lanka on level ground with regional peers
• Aims to go beyond tariffs with broader trade facilitation and reforms; strategy includes improved market access, ease of doing business
• Plans in place to recalibrate export strategy in response to tariff change
• Discussions ongoing on tech transfer and innovation partnerships with US businesses

Treasury Secretary  Dr. Harshana Suriyapperuma

By Charumini de Silva

The Government yesterday said it is working to unlock broader economic opportunities with the US by focusing on improved market access, enhanced trade facilitation and governance reforms.

On 1 August, the US officially announced that it has further reduced reciprocal tariffs to 20% for Sri Lanka exports, scaling down from a steeper initial proposal.

Sri Lanka had been lobbying for a lower rate after US President Donald Trump in April imposed a 44% reciprocal duty on Sri Lankan exports, a retaliatory response to Colombo’s 88% tariff on select US imports. The rate was later reduced to 30% last month and further to 20% following weeks of high-level negotiations. 

Sri Lanka is now among the handful of countries that managed to get a 24% rate cut from the original 44% and its exports are now on par with key regional competitors such as Bangladesh and Vietnam, particularly in the apparel sector, which forms the bulk of US-bound shipments.

Addressing a special media briefing yesterday, Treasury Secretary Dr. Harshana Suriyapperuma described the outcome as ‘placing Sri Lanka on a levelled ground’ with peers, whilst adding that the country’s strategy extends beyond preferential tariffs for selected products. “Our offer is a comprehensive one—opening up markets and making it easier to do business in Sri Lanka. We are on a level ground with our competitors and we must now look at how to move further to gain the maximum advantage,” he said. 

The Treasury Secretary said due to non-disclosure rules Sri Lanka cannot immediately release all areas that are under discussion, but the country has been as open as possible.

He explained that instead of Government-to-Government (G2G) arrangements, Sri Lanka is looking to enable direct engagement between US businesses and local counterparts. “Our goal is to ensure market access on a competitive basis for US suppliers,” Dr. Suriyapperuma said, adding that Sri Lanka’s discussions with the US authorities had reached an advanced level.

He also noted that the Government would engage with the exporters, local industries and State institutions to recalibrate its export strategy in response to the tariff. 

“Beyond tariffs, trade facilitation was a major pain point. That is why the implementation of the National Tariff Policy and Single Window system are crucial milestones,” he said.

He pointed to initiatives such as zero-tolerance on corruption and governance reforms as components of a broader economic offering meant to make Sri Lanka a more attractive trading partner for the US. “These are not only governance reforms, but critical to reducing the cost of doing business in Sri Lanka. It is about creating a more efficient and transparent environment for global trade. Our approach is wholesome, both the US companies and local exporters will gain from a more efficient and transparent system,” he said.

Responding to questions on how much of the market is being opened; he explained that the specific part relating to the technology transfers, knowledge is in the areas where Sri Lankan industries and businesses are looking for advanced technologies whether it is machinery, concept or innovation. “There are opportunities for the US businesses to get connected with more access and openness in those discussions. We are yet to finalise on the finer points and details relating to specifics on those lines, but the intention is to allow Sri Lankan entrepreneurs to access the technology getting advanced on a routine basis for our industries,” he added.

Dr. Suriyapperuma said the Government is keen to frame the final tariff rate within a larger context of economic repositioning. “We hope this opens up further discussion on technology transfer, investments and trade facilitation. There is no timeline at this point,” he added.