Sri Lanka Navigates US Tariffs: Risks & Opportunities 📈

Sri Lanka is strategically adapting to a complex international trade environment shaped by new US tariff measures. • Challenges: The nation faces potential secondary tariffs on critical raw materials for key export sectors, alongside increased domestic production costs and heightened global market uncertainty. • Opportunities: These US tariffs are prompting a redirection of trade away from major exporters like China and India, creating significant openings for Sri Lanka. The country can expand its exports in sectors such as apparel, tea, and rubber. New avenues are also emerging for IT, tourism, and professional services through service sector liberalisation. • Strategic Response: To enhance long-term trade resilience and competitiveness, Sri Lanka must focus on: • Diversification: Broadening both export products and markets to reduce dependency and better absorb global economic shocks. • Domestic Preparedness: Strengthening institutional frameworks, regulatory systems, and fiscal governance. • Adaptive Policies: Aligning domestic capabilities with global opportunities and understanding evolving US trade policies. • Supply Chain Enhancement: Improving quality, production processes, and ensuring compliance with international standards. • Digitalisation & Investment: Leveraging digitalisation, value-added manufacturing, and investing in human capital and infrastructure for sustainable development. This proactive approach aims to transform tariff-induced pressures into strategic advantages, promoting alignment with international standards and Sustainable Development Goals.