By Nadeeka Dissanayake
Aiming to ease off the 44% tariff imposed by the US on Sri Lanka, a Government delegation is set to have discussions with Washington authorities on 22 April.
The discussion follows the talks between the Sri Lankan economic expert team and the IMF on the fourth review of the Extended Fund Facility, which commenced on 19 April in Washington. Confirming this on behalf of the Government, Sri Lankan Labour Minister and Deputy Minister of Economic Development Anil Jayantha, has said that a delegation consisting of officials from the Ministry of Finance and the Central Bank has travelled to the US to take part in the negotiations. The IMF programme faced a delay in Sri Lanka due to the uncertain nature in economic projections following US Tariffs imposed by President Donald Trump.
Minister Anil Jayantha confirmed last week on the Sri Lankan economic team’s visit to Washington, to hold discussions with US authorities on possibilities to ease the challenges the island nation is encountering due to the US tariffs. According to Minister Jayantha’s statement the Sri Lankan team will hold discussions with US trade representatives to reduce the trade surplus Sri Lanka is having with the US through lowering tariffs and increasing imports.
On US’s Liberation Day, 2 April, President Donald Trump, signing an Executive Order, imposed a 10% tariff on all countries trading US products and individualised reciprocal higher tariffs for countries having large trade deficits with the US. The decision was to make America’s economy great again.
According to the White House statements on the official website, more than 75 countries have reached out to the US to discuss new trade deals, resulting in a pause on individualised higher tariffs. China retaliated and ended up facing up to 245% tariffs on imports to the US – a status that is proactively stated in the official website of the White House.
Relating to Chinese Customs statistics, the US-based think tank Center for Strategic and International Studies (CSIS) reported that in 2024, Chinese exported $ 22.8 billion worth goods to the US, which China describes as negligible (de minimis). With this year’s US tariffs imposed on automobiles and auto parts imported to the country, cover those from China. The US-China bilateral trade of goods in 2024 was $ 582.4 billion, US Government states in its China trade summary. Referring to the depreciating nature of the US-China trade over the recent past, the think tank CSIS predicts that it would tend “to further fall precipitously in both absolute and relative terms during 2025.” And reviewing the impact on the Chinese economy, observed “a 2.4 per cent decline in 2025 GDP.”
In this backdrop Chinese leader Xi Jinping visited Malaysia a few days ago in an official visit series to Malaysia, Vietnam and Cambodia. During the dinner hosted by Malaysian Prime Minister Anwar Ibrahim, the Chinese President emphasised on the unity among Asian “family” in facing the global economic shocks. Xi jinping’s visit to Southeast Asia, days following the US tariffs imposed by President Donald Trump, is a sign of China’s efforts to promote itself as a source of stability to the Asian region – be it planned or not before the US tariff issue. This possibly could be viewed as a mission on China’s Belt and Road Initiative.
At the dinner hosted by Malaysian Premier Anwar Ibrahim, the Chinese leader said: “Together we will safeguard the bright prospects of our Asian family.”
The critical question to economically-stuck Sri Lanka is how the US-Sino trade war would affect the country’s economy – short term and in the long run. The Sri Lanka-China Friendship Association (SLCFA), issuing a statement online on 20 April emphasised that the new tariffs imposed by the US is not an action that only affects China but the entire world. The SLCFA stated: “They will increase the cost of shipping, disturb the flow of goods between countries, and make inflation worse. This will hurt both consumers and businesses in the U.S. and many other nations.” Commenting on the struggling recovery of Sri Lanka’s economy, the sort of decisions “large countries” take “create uncertainty and difficulty for smaller nations like ours.” Echoing Chinese President Xi Jinping’s statement made in Malaysia, the SLCFA stated that the region must work together to stay peaceful, strong and independent.
Amidst the added economic challenge, how can Sri Lanka survive? – A crucial fact the Government must communicate to Sri Lankan citizens.
The discussions to take place on 22 April between Sri Lankan Government representatives and Washington authorities are yet to be revealed. Would Sri Lanka be able to walk through the storm and survive?
Sri Lanka, with its economic approach aligned with China, US and India, must tread delicately to decide on steps to entangle the new challenges created by the US tariffs. It is the Government’s duty to inform the citizens how to reckon with the new economic realities in the backdrop of these drastic global trade shifts.