📈 EDB Hopeful on Avoiding Proposed 12.5% US Tariff Through Trade Pact

• Overview: The Export Development Board (EDB) clarified that the proposed 12.5% US tariff under the USTR’s Section 301 investigation is an extension of an existing reciprocal tariff process, not an entirely new levy. The current 10% tariff rate is set to expire this July. • Tariff Trajectory: Sri Lanka was initially facing a 44% tariff when reciprocal actions were announced on April 2. Following negotiations, the rate was successively reduced to 30%, 20%, and finally the current 10% rate. • The Core Issue: The Office of the US Trade Representative (USTR) proposed the 10% to 12.5% tariff adjustments for 60 economies, including Sri Lanka, following determinations regarding the enforcement of bans on goods produced with forced labour. Sri Lanka is currently grouped under the higher 12.5% rate. • Next Steps & Mitigation: • The Ministry of Trade, Commerce, Food Security and Co-operative Development is actively negotiating to halt the tariff before its scheduled July 24 implementation. • Sri Lanka's formal appeal deadline is July 9. • EDB Chairman Mangala Wijesinghe expressed optimism that signing a pending bilateral trade agreement or securing favorable consideration on representations could help avoid the levy or maintain a competitive regional rate between 10% and 12.5%.