How Is the Government Planning to Respond to the U.S. Tariff? Sajith Premadasa

12-Jul-2025

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U.S. President Donald Trump has imposed a 30% reciprocal tariff on all goods exported to the United States from Sri Lanka. This will have a severely negative impact on our country’s exports. What steps does the government intend to take in response? asked Opposition Leader Sajith Premadasa.

In a special statement issued on Thursday, he further stated, this will seriously affect apparel, tea, rubber, information technology, and fisheries sectors. 

The U.S. accounts for 26.4% of our export market. In 2024, the total export value was $3.8 billion. The imposition of a 30% tariff will place immense pressure on export businesses.

Approximately 60% of our apparel exports are destined for the U.S. This tariff will reduce demand by 30–40%, severely impacting rubber and tea as well. The resultant decline in dollar inflows will lead to rupee depreciation, potentially causing inflation and increased import costs.

Furthermore, with about 350,000 people employed in the apparel sector, these tariffs pose a death knell for job security. The measure will also severely undermine our ambition to position Sri Lanka as a hub for export-oriented FDI.

Despite some claiming that the reduction from 44% to 30% will have limited impact, imposing such a high tariff will be deeply harmful, creating favorable conditions for competitors like Vietnam and Bangladesh. We may lose our reputation for high-quality manufacturing. Value-added tea and rubber products will also suffer significant setbacks.

The public is questioning whether the current government has done everything possible to secure the country’s interests. Even before this issue emerged, following President Trump’s election victory, we had warned the government in Parliament and elsewhere about potential developments.

Was our diplomatic responsibility fulfilled? Were appropriate protocols observed in negotiations with the U.S.?

We should have engaged with Senators, Congressmen, and especially those with ties to Sri Lanka to exert maximum pressure. Given that the tariff measure was passed with a narrow majority, Sri Lanka could have leveraged the situation more effectively. Did the government utilize this opportunity? Has pressure via the WTO been applied properly?

These tariffs will have serious consequences for multiple sectors. What answers and solutions does the government propose? Loss of employment and closure of factories could create severe social devastation, increasing poverty. In this situation, it is vital for us to understand the government’s clear strategy.

As the Opposition, the Samagi Jana Balawegaya will extend maximum cooperation for the sake of the country, the people, and the export sector, he concluded.