Trump settles for 30% tariff on Sri Lanka, down from 44% proposed earlier

US President Donald Trump

President Anura Kumara Disanayake

• Some analysts welcome 30% rate for Sri Lanka as better than Laos, Myanmar, Cambodia, Thailand, Bangladesh and Indonesia 
• Disappointment for others who were expecting 20% tariff
• Japan, Malaysia and Philippines charged lower tariff than SL
• Trump invites Sri Lanka to participate in “extraordinary economy of the United States”
• Says 30% is far less than what is needed to eliminate trade deficit disparity with US
• Warns if SL decides to raise tariff, then whatever number chosen will be added onto 30% that US will charge from 1 August
• Insists tariff slapped as necessary to correct many years of Sri Lanka’s high tariff and non-tariff policies and barriers 
• Claims unsustainable trade deficit with SL is major threat to US economy and national security
• Assures if SL eliminates tariff and other policies and barriers, US will consider further adjustment

US President Donald Trump has settled for a 30% tariff on imports from Sri Lanka, down from 44% proposed in April.

He announced the move in a letter to President Anura Kumara Disanayake dated 9 July 2025.

Analysts welcomed the move, which is lower than the tariff slapped on Laos and Myanmar (40%), Cambodia, Thailand (36%), Bangladesh (35%), and Indonesia (32%). However, others described it as higher than what Sri Lanka was lobbying for, which was 20%.

Japan, Malaysia, and the Philippines have been slapped with a 25% tariff.

The US remains the largest export market for Sri Lanka, accounting for 27% ($ 3 billion) of the total manufactured exports ($ 12.8 billion) as of 2024—out of which textile and apparel exports accounted for 64% of the total exports 

to the US.

The reciprocal action by Trump was due to the trade imbalance of $ 2.6 billion in 2024 in favour of Sri Lanka as against the US.

Treasury Secretary Dr. Harshana Suriyapperuma earlier this week expressed hope that Sri Lanka could expect a favourable stance from the US on the looming reciprocal tariffs.

“We had several rounds of discussions with the US Trade Representative (USTR). They’ve indicated Sri Lanka is in a relatively better position, but at the end of the day, the decision will factor in the broader global trade scenario,” he told journalists. “Our hope is that given our proactive engagement, multiple discussion rounds, and overall cooperation with the USTR, Sri Lanka will get a positive stance,” Dr. Suriyapperuma reiterated.

The Free Trade Zone Manufacturers’ Association (FTZMA) this week warned that Sri Lanka’s economy could face a significant blow from the proposed tariffs by US President Donald Trump, leading to a loss of up to 50,000 jobs in the initial phase, and undermine the country’s competitiveness across South and Southeast Asia. (See https://www.ft.lk/front-page/Sri-Lanka-faces-50-000-job-loss-risk-amid-looming-US-tariffs-FTZMA/44-778692).

Trump in his letter, however, misspelt President Disanayake’s first name as Aruna.

Following are excerpts from Trump’s letter.

It is a great honour for me to send you this letter in that it demonstrates the strength and commitment of our trading relationship and the fact that the United States of America has agreed to continue working with Sri Lanka, despite having a significant trade deficit with your country. Nevertheless, we have decided to move forward with you, but only with more balanced and fair trade. Therefore, we invite you to participate in the extraordinary economy of the United States, the number one market in the world, by far. We have had years to discuss our trading relationship with Sri Lanka and have concluded that we must move away from these long-term, and very persistent, trade deficits engendered by Sri Lanka’s tariff, and non-tariff policies and trade barriers. Our relationship has been, unfortunately, far from reciprocal. 

Starting on 1 August 2025, we will charge Sri Lanka a tariff of only 30% on any and all Sri Lankan products sent to the United States, separate from all Sectoral Tariffs. Goods transhipped to evade a higher tariff will be subject to that higher tariff. Please understand that the 30% number is far less than what is needed to eliminate the trade deficit disparity we have with your country. As you are aware, there will be no tariff if Sri Lanka or companies within your country, decide to build or manufacture products within the United States and, in fact, will do everything possible to get approvals quickly, professionally and routinely – in other words, in a matter of weeks.

If for any reason you decided to raise your tariff, then whatever the number you choose to raise them by, will be added onto the 30% that we charge. Please understand that these tariffs are necessary to correct the many years of Sri Lanka’s tariff and Non-Tariff policies and trade barriers causing these unsustainable trade deficits against the United States. This deficit is a major threat to our economy and, indeed, our national security.

We look forward to working with you as your trading partner for many years to come. If you wish to open your heretofore closed trading markets to the United States and eliminate your tariff, non-tariff policies and trade barriers, we will perhaps consider an adjustment to this letter. These tariffs may be modified, upward or downward, depending on our relationship with your country. You will never be disappointed with The United States of America.

Thank you for your attention to this matter.

With best wishes, I am, 

Sincerely

Donald Trump

President of the United States of America.