Business
Going Beyond the US Reciprocal Tariffs: Sri Lanka’s exposure to the tariffs and exemptions
The United States’ (US) proclamation of “reciprocal tariffs” dealt a blow to the global trade system based on the World Trade Organisation (WTO) principles. With the individualised tariff rates, the US has discarded non-discrimination in the Most-Favoured-Nation (MFN) tariff structure. The “reciprocal tariff” rate does not show any reciprocity but rather a calculation hypothesised to drive a bilateral trade deficit to zero.
Although the “reciprocal tariff” grabbed attention, US trade policy under the second Trump administration is more complex. Section 232 of the US Trade Expansion Act of 1962 is being used to target key sectors like steel, aluminium, and auto parts. In addition, investigations are ongoing to determine tariffs for copper, critical minerals, pharmaceuticals, and lumber.
For Sri Lanka, as calculated using 2024 data, 95.6% of US imports are subject to reciprocal tariffs – with the 90-day pause, standing currently as a 10% global tariff. In addition, 4.2% of imports from Sri Lanka are subject to the steel and aluminium and auto parts tariffs imposed under Section 232. However, 0.2% of Sri Lanka’s imports are exempted from the new tariff measures. These exemptions were made by issuing Annex-II of the US Executive Order on the reciprocal tariffs and a notice issued by the US Customs and Border Protection (CBP) on April 12.

Sri Lanka’s Exposure to Section 232 Tariffs:
Steel, Aluminium and Auto Components Tariffs
In 2018, under the first Trump administration, the US imposed a 25% tariff on steel and a 10% tariff on aluminium imported from all trade partners under Section 232 tariffs.
On March 12, 2025, the US expanded the 2018 Section 232, increasing the aluminium tariff to 25%, removing all existing exemptions, and adding more derivative products which use steel and aluminium as components. For example, a keg is an aluminium derivative product. When steel and aluminium imports are expensive due to tariffs, domestic producers are no longer competitive in the production of derivatives such as the keg in the earlier example. This leads to lobbying for cascading protectionist tariffs on imported derivatives. Thus, cascading protectionism means that when a raw material is subject to tariffs in the downstream, the final good becomes less competitive, forcing producers to demand tariff protection for the final goods.
Sri Lanka’s exports will be subjected to an additional 25 per cent of the value of the steel and aluminium content under the 2025-Section-232 tarrifs. The newly added aluminium derivative products account for USD 28.5 Mn in US imports from Sri Lanka, across 27 products. There are USD 80.78 Mn imports under 20 products from Sri Lanka, which are categorised as steel derivatives under the Section 232 Steel and Aluminium tariff proclamation by the US.
New challenges for exporters
One main challenge of the new US tariff structure is the additional reporting requirements to exporters. Notably, the stipulated tariffs will be calculated for the steel or aluminium value of the products, which are exempt from reciprocal tariffs. For example, machinery parts made of steel will be subject to 25% additional steel tariffs, but they are not subject to 10% or 44% reciprocal tariffs. If the machinery parts contain 60% steel value, then the 25% tariff is applied for the 60% steel value. The remaining 40% is subject to the relevant tariff line specified for machinery parts. The exporters need to report on the aluminium and steel content by value, and failure to do so will result in an additional 25% tariff on the whole product’s value.
Lack of information on the steel and aluminium content makes reporting challenging for exporters. Although tariff calculations need the aluminium or steel value, that information is not given in publicly available data; the calculation of tariff increases needs assumptions. Assuming 25% of product value, the fabricated metal sector sees a weighted average tariff increasing to 6.7% from the base tariff rate of 0.6%. The Section 232 products are not subject to reciprocal tariffs. It explains the stable weighted average tariff rate for the fabricated metal sector, even after applying a 10% global tariff and 44% reciprocal tariffs in Figure 2.

The US also announced tariffs on automobiles and parts on March 26 and enacted auto tariffs on April 03. However, the tariffs on automobile parts were delayed to a future date not later than May 03, 2025. The auto components account for 0.5% or USD 10.9 Mn exports by Sri Lanka. New pneumatic radial tyres, non-cellular vulcanised rubber articles, and electric control apparatus are among the products subject to auto component tariffs. As shown in Figure 2, the effective weighted average tariff for motor vehicle sector exports from Sri Lanka to the US will increase to 19.66% on May 03.
Exemptions from some additional tariffs have little Implications for Sri Lanka.
The US exempts certain products necessary for the US domestic industries or those that are subject to Section 232 tariffs. Ten products exported by Sri Lanka are exempted from the reciprocal tariffs, including natural rubber and natural graphite (Figure 3). Natural graphite is an essential component and critical mineral in EV battery manufacturing. On April 12, the US Customs and Border Protection (CBP) released another list of exemptions, primarily composed of electronic equipment. The exemptions exclude products from the direct effect of additional tariffs. However, there is no added advantage from this exclusion, as all countries receive the exemptions, eliminating any relative price advantage for Sri Lanka.

Note: These exemptions were made by issuing Annex-II of the US Executive Order on the reciprocal tariffs and a notice issued by the US Customs and Border Protection on April 12.
Reciprocal Tariffs: Effective Tariff Rates for Sri Lanka
As a 44% “reciprocal tariff” will not be imposed until July, the current effective tariff rate is the MFN rate plus 10%, which applies to 95.6% of Sri Lanka’s exports to the US, worth USD 2.93 Bn. Accordingly, since April 05, the apparel sector has had a 26.65% average tariff (Figure 4). The base MFN tariff average for wearing apparel was 16.65%.

Sectors such as rubber, other manufacturing products, including gems and precious stones, and food preparations experience the most significant relative tariff hikes. These sectors had tariff rates that were less than 2% before April 05. Notably, 37.7% of Sri Lanka’s apparel exports go to the US, while the US share in other manufacturing products is 67.6% (Figure 4). The high reliance on these sectors increases their vulnerability to tariff shocks and plunges in demand in the US market.

As the Section 232 steel and aluminium tariffs, 10% global tariff, and exemptions are already effective, a significant challenge exporters face is meeting reporting requirements. For example, exporters need to report the steel and aluminium content for tariff calculations, and failure will result in the automatic application of 25% to the total value of the derivative product.
In addition, the country of origin of steel and aluminium used in derivative products should be declared to avoid the 200% tariff imposed for aluminium and steel from Russia. Thus, reporting can be a technically challenging and costly task for exporters.
In addition, Sri Lanka needs to be vigilant and follow the US CBP guidance to avoid higher tariffs due to rules of origin; If a different country is identified as the country of origin, Sri Lanka must pay the tariff rate applied to that particular country. Irrespective of the outcome of negotiations on the 44% reciprocal tariffs, the Section 232 tariffs, reporting requirements, and rules of origin complexities will prevail. The necessary technical assistance should be provided to the exporters to minimise the tariff cost under the current US trade policy regime.
By Dr AsAnkA
Wijesinghe
Business
Fertilizer shortages threaten to wither Sri Lanka’s plantation sector output
The Planters’ Association of Ceylon (PA), the apex body of Sri Lanka’s plantation industry, expressed growing concern over rising prices and limited availability of fertilizer amid the escalation of the crisis in the Middle East.
With the closure of the Strait of Hormuz, shipping traffic through the region is reported to have dropped by 90%. Given that an estimated one-third of global trade in raw materials for production of fertilizer flows through the Strait, these interruptions are already disrupting fertilizer supply chains around the world.
After Russia, Egypt and Saudi Arabia, Iran is the fourth-largest global supplier of urea, the most widely used fertilizer ingredient.
Given the dire implications on domestic agricultural production, the PA commended the Government’s primary focus on safeguarding national food security, and welcomed the fertilizer subsidy for additional crops being increased up to Rs. 18,000. Such measures are part of a broader effort to support the agricultural sector during this period of volatility.
However, the PA cautioned that the implications of another fertilizer crisis extend well beyond direct agricultural impact. Importantly, the next two to four months will have a significant impact on the annual crop yields of the industry. The Association warned that these dynamics could significantly affect balance of payments, inflation, and purchasing power for critical resources like fuel.
The current fertilizer crisis echoes the challenges faced during the 2021 ban, which caused a calamity in the plantation sector. Even after the ban was lifted, it took four years to recover, and just as progress was being made, the current fertilizer issue has emerged.
The PA also highlighted the stress on Regional Plantation Companies (RPCs) and smallholders in particular, noting that the industry was already under significant pressure as result of rising cost of production.
Moreover, the PA noted that only a limited number of companies are authorized to distribute fertilizer, and the PA calls on the government to mitigate these challenges.
Throughout the COVID-19 pandemic, the plantation sector played a crucial role in generating foreign exchange to support the economy, and it is essential that the industry continues to contribute to macroeconomic stability during this crisis.
In a recent news article senior Professor Buddhi Marambe from the University of Peradeniya noted that with paddy cultivation alone needing approximately 98,800 metric tonnes for the Yala season, current stocks cover only about 60% of the total national requirement.
The PA also emphasized the entire plantation industry’s vital role in upholding the economy, particularly in generating foreign exchange via export revenue, and in supporting rural livelihoods.
According to an analysis published on 15 March 2026 by the FAO Chief Economist’s Office, the Gulf region accounts for roughly 30 to 35% of global urea exports, supply chains that have been severely disrupted since the conflict began.
The study found that the farming systems most exposed are those combining high fertiliser application rates with significant dependence on Gulf supply chains, a profile that applies across South Asia, East Africa and parts of Latin America. The FAO analysis projects global fertiliser prices averaging 15 to 20% higher across the first half of 2026 if the disruptions persist, with yield consequences materialising in harvests later in the year and into 2027.(PA)
Business
Women workers speak out for fair pay, safety and dignity
Women workers who gathered at the Shramabimani Centre in Seeduwa to mark World Women’s Day on March 29 demanded a living wage that matches the rising cost of living, decent working conditions, safety of workers, better healthcare facilities and limiting the extensive working hours, from the government and employers.
Free Trade Zone (FTZ) workers urged the lawmakers and their employers to understand the silent tears shed amid the sound of machines.
“We face frequent humiliation and insults within and outside work which a woman cannot bear but we go through them to feed our children, parents and other dependents in our homes, said Shriani Fernando, an employee of a garment factory at the Katunayake FTZ.
Many such sad stories were narrated on the appalling living and working conditions of female workers who have left behind their families, kith and kin to keep the wolf from the door.
“There is no privacy in a ten by ten room shared with other workers who have to walk back to their rooms late night through lonely streets, said Indrani Weerasinghe, a mother who has to feed five mouths with the little wage she earns as a factory employee.
Female workers who are compelled to leave the safety of their homes at a very tender age to support the family fall prey to men seeking opportunities to satisfy their carnal desires.
The predator could either be the employer, landlord, a friend, the partner or a sympathizer with ulterior motives.
“While walking back to our rooms men ask us whether they could give us a lift. When we refuse the offer they pass disgusting remarks, a young worker said.
Speech and hearing impaired workers said that they too are capable of doing any work as others.
They said we have eyes, a good brain, hands and feet to work. We need to be treated like all others instead of attracting verbal sympathies.
Many workers who are victims of sexual exploitation and harassment keep silent to safeguard their jobs.
“We know the outcome if we speak against the unfair treatment by our bosses. If we lose our jobs who will feed our children, said Susumali Dissanayake, a mother of four employed at a garment factory in Gampaha.
What is saddening and gruesome is the act of some workers compensating the low wage or income by offering themselves to fulfill the insatiable sexual appetite of certain men.
Women garment workers in FTZs face severe exploitation, including 16-hour workdays, unachievable production targets, sexual harassment, and hazardous conditions. Many endure poverty, wage theft, and lack of basic facilities, often resulting in Urinary Tract Infections (UTIs) due to poor sanitation and limited bathroom access
Landless female workers in the Gampaha District urged the present authorities to bring an end to their homeless state by fulfilling a fundamental right to live in a house of their own in a decent way.
“The manner in which we are treated sometimes by our landlords is similar to being a slave. Shifting houses each year or two is nothing short of being refugees who have no status and dignity, said A.Shridevi from Walana, Katunayaka.
“We have been living like gypsies moving from one house to another without a permanent address for a long time. What we ask from the government is to give us the title deeds to the houses we are in now so that we have some status and respect, said Shandani Fernando, a member of the Association of Homeless Families in Gampaha.
Unpleasant language
“When we fail to pay the rent by one day we hear so unpleasant language from the landlords and some of us have broken family relations due to misunderstanding while sharing the same house with the siblings, she said.
Rev.Sr Noel Christine Fernando, a prominent rights activist who leads the Sramabimani Kendraya (or Shramabimani Centre) in Seeduwa, a rights group focusing on worker solidarity, particularly within the free trade zones said the battle to secure the rights of workers will go on whichever government is in power.
“It was never a smooth sailing for the Sharmaabimani centre since its start in 1994. However, it waded through high tides, rough waters and stood through thick and thin to be what it is today branching out for every worker to take rest and shelter, Sister Fernando said.
She said it’s these worker’s toil and tears that bring the much needed foreign exchange to the country. We believe this government that came to power through the ballot of the landless people will heed their cry and provide them a permanent house.
Rev. Fr. Sarath Iddamalgoda, core founder and director of Shramaabimani Centre said under whatever condition ‘we musn’t forget the vision and the mission that we are called to ensure justice for the oppressed and the marginalized people’
He said the condition of the landless community in the Gampaha district and in the rest of the country is similar to the estate community who have been living for over 200 years without proper status which reveals the extent of social inequality and discrimination in a nation that is signatory to many UN conventions on right to life and decent living.
“A bottom-top discussion and collaboration with a people-friendly and people-centred administrative mechanism is critical to address the persisting issue of the ‘unknown poor’ in the country whose call for a permanent house has gone unheeded for many decades, he said.
According to the UN an increasing number of people are driven from their homes by crises such as conflict, political instability, climate change, and economic hardship. A record number of people are forcibly displaced and – in an increasingly urbanizing world – displacement is becoming an urban phenomenon.
Meanwhile poverty in Sri Lanka has been rising since the economic crisis in 2022 where many households in the ‘middle income’ bracket have been pushed down to the ‘poor’ segment.
According to the World Bank poverty continued to increase in 2021, and doubled between 2021 and 2022, from 13.1 to 25.0 percent ($3.65 per capita, 2017 PPP) adding 2.5 million people into poverty in 2022.
Eradicating extreme poverty for all people everywhere by 2030 is a pivotal goal of the 2030 Agenda for Sustainable Development.
By Lalin Fernandopulle
Business
Aitken Spence Travels leads in regenerative tourism
Aitken Spence Travels has once again reaffirmed its leadership in Sri Lanka’s tourism sector, being recognised as a Category Winner in the Hospitality & Tourism Services sector at the CPM (Chartered Professional Management) Best Management Practices Company Awards 2026 for the third successive year. Achieving a significant milestone, the company was also listed among Sri Lanka’s Top 40 companies for the first time, underscoring its continued commitment to excellence and innovation.
As Sri Lanka’s leading destination management company, Aitken Spence Travels has consistently demonstrated best in class management practices, earning recognition at the CPM awards, which celebrate organisations that uphold high standards of corporate performance, governance, and sustainability.
This year’s recognition reflects the company’s strategic focus on regenerative tourism, an approach that goes beyond sustainability to actively restore and enhance the environmental, cultural, and socioeconomic landscapes in which it operates. By designing travel experiences that create meaningful value for local communities while preserving natural ecosystems, Aitken Spence Travels continues to redefine the role of tourism in a rapidly evolving global context.
Aitken Spence Travels Managing Director Nalin Jayasundera stated, “At ASTL, sustainability is not a standalone initiative, it is central to our strategic direction and governance framework.” This commitment is driven by the continued leadership and dedication of both the Managing Director and the Aitken Spence Group, with the company’s sustainability initiatives closely aligned with Group level policies that ensure strong governance, accountability, and oversight. Notably, Aitken Spence Travels stands as the only destination management company in Sri Lanka to be certified by Travelife and the Global Sustainable Tourism Council (GSTC), in addition to holding ISO certifications, further reinforcing its leadership in responsible and regenerative tourism.
Commenting on this achievement, Chairperson/Chairman of Aitken Spence PLC, Stasshani Jayawardena added “Aitken Spence Travels reflects the broader Aitken Spence Group ethos, where sustainability is embedded into governance and strategic direction rather than as stand-alone projects. This has been an integral part of how our businesses operate, ensuring accountability, consistency, and responsible growth across all our sectors, including travel and tourism.”
-
Business4 days agoHarnessing nature’s wisdom: Experts highlight “Resist–Align” path to resilience
-
News6 days agoPNS TAIMUR & ASLAT set sail from Colombo
-
News4 days agoGratiaen Trust announces longlist for the 33rd Annual Gratiaen Prize
-
News3 days agoFrom Nuwara Eliya to Dubai: Isha Holdings markets Agri products abroad
-
News18 hours agoRs 13 bn NDB fraud: Int’l forensic audit ordered
-
Opinion2 days agoShutting roof top solar panels – a crime
-
News4 days agoHeroin haul transported on 50-million-rupee contract
-
Latest News5 days agoSingapore Zoo’s first Sri Lankan leopard cubs make their public debut
