by Gomi Senadhira

The second term of Donald Trump as the President of the United States will begin on January 20, 2025. He will return to the White House for his second term, or Trump 2.0, with renewed emphasis on the “America First” doctrine and reshaping the global order, and both his supporters and critics have made clear that his second term will look nothing like the first. That means, Trump 2.0 will be even more volatile and disruptive than the first, with major changes in the US economic, trade, foreign and security policies with far-reaching implications for all countries. So, it is important and timely to ask what will be the impact of Trump 2.0 on Sri Lanka and plan how to respond to challenges and opportunities that would arise from those changes.

Here, the first and foremost area Sri Lanka should immediately focus on is the impending changes to the US trade and tariff policy. Sri Lanka, which accounts for 0.1% of the total US imports will certainly not be a priority in President Trump’s trade policy agenda. But Sri Lanka should consider the ongoing changes in the trade policy of the United States as the top priority because that market accounts for nearly a quarter of Sri Lanka’s total exports. Any major changes in the US trade policy, particularly tariff increases, will have an immediate and far-reaching impact on our exports, the GDP and export related jobs.

The “Tariff Man”

While on the campaign trail, Trump called himself a “Tariff Man,” and had promised to raise tariffs to 60% for all goods imported from China and to 10% to 20% for those imported from other countries. This he argues, would strengthen the US’s international trade position and boost US job growth. Then he had also promised to, “….  as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States…. This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”

Mexico, China and Canada, with market shares of 15.1%, 14.1% and 13,6% respectively, are the three largest exporters into the United States. The European Union has a market share of 18.6%. With over 60% of the market share. In 2023 exports to the United States from Mexico were valued at $ 480 billion and from China were valued at $ 448 billion. When compared to these main exporters to the United States, Sri Lanka is a very small player. In 2023 our exports to the USA were valued at US$ 2.9 billion which amounted to 0.1% of total imports by the United States.

Right after the declaration of the election results, addressing a triumphant crowd of supporters in Florida, Trump summed up his approach to a second term as such: “I will govern by a simple motto: Promises made, promises kept.” So, will he keep these promises? And what would be the impact of these high tariffs on Sri Lanka? Though past performance is not a reliable guide to the future, the answers to some extent we may find in his previous presidency, Trump 1.0.

Trump 1.0

During his last presidential term (2017 -20) President Trump did not implement all his campaign promises. But what was implemented created uncertainty and volatility in the global markets. Most importantly in January 2018, the first Trump administration began setting higher tariffs (ranging from 7.5% to 25%) on a number of Chinese imports into the US with the objective of forcing China to change “longstanding unfair trade practices and intellectual property theft.” Prior to that, China, like all other members of the WTO, was entitled for MFN (Most Favoured Nation) tariffs in the United States. China joined the WTO in 2001, after 14 years of bilateral and multilateral negotiations, first under the auspices of GATT (General Agreement on Tariffs and Trade) and later under the WTO (World Trade Organisation). During the lengthy accession process one of the key steps was the signing of the US-China bilateral agreement which is generally considered the core of the accession agreement. The China specific higher tariffs imposed by Trump1.0 were above the prevailing MFN tariffs. In response, the Chinese government accused the US of engaging in protectionism and took retaliatory action, setting off a trade war between the two countries. After the trade war escalated through 2019, in January 2020 the two sides reached a “phase-one” agreement. During the Trump 1.0, the United States also pressured Canada and Mexico to negotiate a new trade agreement, US-Mexico-Canada Agreement (USMCA) replacing the quarter-century-old North American Free Trade Agreement (NAFTA). Under NAFTA and the USMCA Mexico and Canada get reciprocal duty-free market access into the United States.

During that period almost all Asian countries benefited significantly as the manufacturers shifted their production facilities in China into the countries in the region to avoid Trump’s tariff hikes. As a result, the region’s exports to the US had increased steadily since the beginning of the trade war. Vietnam’s exports to the US more than doubled from US$48 billion in 2017 to US$ 118 billion by 2023. Thailand’s exports increased from US$32 billion to US$ 58 billion and India’s exports increased from US$ 50 billion to US$87 billion.

Unfortunately, during Trump 1.0, Sri Lanka was the only Asian country that failed to benefit from the diversification of sourcing away from China into other Asian countries. Sri Lanka’s exports to the US declined during that period from US$ 2.978 billion in 2017 to US$ 2.976 billion by 2023.

Trump 2.0 – another trade war looms

Notwithstanding all these agreements signed with China, Mexico and Canada President Trump has now promised to introduce a 60% tariff on all imports from China and has vowed to apply higher 25% tariffs on all goods coming from Canada and Mexico! In addition, he has also promised to introduce a 10% to 20% tariff on all other countries. Will these tariff hikes be fully implemented or are these threats simply “useful negotiating tool”?

Given the unpredictable style in which President Trump operates, it is difficult to predict which of the campaign promises will really be fully implemented. But we can certainly anticipate an all new U.S. tariff regime in 2025. Most probably, it will be something less than a blanket tariff hike, with significant carve outs for FTA (free trade agreement) partners and essential goods, but still be much higher than what we have now. Higher tariffs on most Chinese goods will certainly arrive early. With higher import tariffs being imposed by the US and possible retaliatory actions by other countries, it’s really difficult to guess as to how the tit-for-tat game ends. But the year 2025, will be remembered as a year of a major trade war between the world’s largest trading nations and market instability.

Impact on Sri Lanka

When higher tariffs are introduced by the United States there will be risks and opportunities for Sri Lankan exporters. Most of our exports to the US already pay a high tariff of over 10%. Even if across the board a 10% to 20% tariff is introduced it will not have a major impact on those exports. Other exports with lower tariffs, like tea and rubber products, may face some market access issues. But, overall impact will be favourable to Sri Lanka. If we plan and strategize correctly and intervene pro-actively Sri Lanka could benefit from the anticipated changes in the US trade policy. But it is important to remember that Sri Lanka was the only Asian country that failed to benefit from the China specific tariff hikes during Trump 1.0. So, this is not the time for a “wait-and-see” approach.

As the anticipated changes, had been well signalled much in advance, relevant government agencies, Sri Lankan businesses exporting to the US and the trade associations (AmCham–Sri Lanka and the Joint Apparel Association Forum – JAAF) should do everything they can to moderate the adverse effects and to benefit from possible trade and investment diversions. This is essential as the US importers have already shifted at least some of their orders for 2025 away from China and Mexico to minimize the possible adverse impact of very high tariffs anticipated from January 20th. The recent “slow surge in orders” received by Sri Lankan apparel exporters as well as the recent investment by an American engineering technology group at Wathupitiwala, could have resulted from this discreet shift of sourcing.

Why did Sri Lanka fail to attract any noteworthy US investment relocated from China during and since the last Trump administration? Can we reverse that now and start to benefit from American customers’ demand to diversify supply chains? It is possible to find the answers to these two questions in the speech made by  the US Ambassador Julie Chung at the foundation stone laying ceremony for the new American factory at Wathupitiwala, last October, where she stated,  “SHIELD’s decision to shift its facility in China to establish a manufacturing facility here in Sri Lanka is a testament to the growing interest of US investment in Sri Lanka….Manufacturing moves like this one, driven by customer demand to diversify supply chains, represent a great opportunity for Sri Lanka. If the new government can strengthen the investment climate, implement anti-corruption measures, and strengthen business-friendly governance and transparency, there is potential for even more manufacturers to make similar moves.”

(The writer, a former public servant and a diplomat, can be reached at senadhiragomi@gmail.com)

by Dr B. J. C. Perera
MBBS(Cey), DCH(Cey), DCH(Eng), MD(Paed), MRCP(UK), FRCP(Edin), FRCP(Lond),
FRCPCH(UK), FSLCPaed, FCCP, Hony. FRCPCH(UK), Hony. FCGP(SL)
Specialist Consultant Paediatrician and Honorary Senior Fellow, Postgraduate Institute of Medicine, University of Colombo, Sri Lanka.
Joint Editor, Sri Lanka Journal of Child Health
Section Editor, Ceylon Medical Journal
Past President, Sri Lanka Medical Association (2013).
Founder President, Sri Lanka College of Paediatricians (1996-97)

There is considerable global concern regarding the current escalation of respiratory infections in China. Of course, the main reason for worldwide apprehension on the present situation is linked to the everlasting memory of COVID-19 pandemic that was claimed to have originated in China and caused havoc and mayhem right across the globe. The memories of the dire effects of that miserable virus are quite fresh in the mind of the entire planetary population.

This time however, as winter gripped China, that entire nation is made to grapple with a surge in respiratory infections, a confluence of viruses and bacteria overwhelming their healthcare systems. It is reported that all health services in China are tried to the extreme maximum and stretched to the limit. While COVID-19 still remains quite a concern in China, it is now joined by a formidable cast of microorganisms or bugs, including influenza, respiratory syncytial virus (RSV), adenovirus, rhinovirus, human metapneumovirus (HMPV), and Mycoplasma pneumoniae. The last-mentioned mycoplasma organism is a somewhat strange bacterium that is known to cause significant lung infections, especially in children and the elderly. However, it is the only one out of that entire lot against which there are effective antibacterial therapies.

In the face of evolving information about human infections being caused by this plethora of different organisms, the present situation in China, aptly described as a huge storm of many types of respiratory infections, has now sparked fears of a widespread health crisis in that country. That would concomitantly lead to shivers down the spines of inhabitants of many other countries, especially in view of the memories of the terrible consequences that followed COVID-19.

The present wave of chest infections in China is a stark reminder of the ever-evolving nature of respiratory illnesses. While COVID-19 dominated headlines for quite a few years, the recent easing of restrictions has also allowed other viruses and bacteria to resurge. The current respiratory infection surge in China is a complex phenomenon driven by multiple pathogens.

Of all these bugs that are causing havoc in China, influenza is well-known to be perennial winter threat, and remains as a very significant player. Both influenza A and B strains are circulating, causing fever, cough, sore throat, and muscle aches. In severe cases, influenza can lead to pneumonia and even death, particularly among the elderly and those with underlying health conditions.  Respiratory Syncytial Virus, primarily affects young children, has the potential to cause mild cold-like symptoms to severe bronchiolitis and pneumonia. Its resurgence has overwhelmed paediatric wards in many parts of China. Adenoviruses are also known to cause problems in children, leading to a range of illnesses, from mild respiratory infections to severe pneumonia as well as eye involvement in the form of conjunctivitis. Rhinovirus, the most common cause of the common cold, can contribute to the overall burden of respiratory infections. There are major concerns regarding the Human Metapneumovirus. Often overlooked, HMPV can cause symptoms similar to the flu, including fever, cough, and difficulty breathing. However, it poses a particular risk to infants, young children, and the elderly, in whom it could go on to a life-threatening illness. Mycoplasma pneumoniae can cause a type of pneumonia known as “walking pneumonia,” characterized by a persistent cough and mild fever but we cannot forget that in some cases the illness becomes quite severe.

The timing of this surge coincides with the onset of winter in China, a period when respiratory infections are typically more prevalent. Cold weather can weaken the immune system, making individuals more susceptible to infection. In the Western countries that have winter weather, respiratory infections are quite common but has not assumed the proportions that are presently seen in China. Additionally, in many countries, including China, the prolonged period of COVID-19 restrictions may have weakened population immunity to other respiratory pathogens as well, contributing to the severity of the current wave in China.

As indicated above, certain groups are particularly vulnerable to severe illness from these infections. In young children the immune systems are still developing, making them more susceptible to severe infections from all kinds of viruses. The elderly have already weakened immune systems as well as other underlying health conditions that put them at increased risk of severe illness and complications. Individuals with chronic health conditions, including young and the middle-aged who are afflicted by asthma, diabetes, and heart disease are more likely to experience severe complications from respiratory infections. Pregnancy too can weaken the immune system, making pregnant women more susceptible to severe illness.

The relentless surge in sheer numbers of affected people has put a significant strain on China’s healthcare system. Hospitals are overflowing with patients, and medical staff are working tirelessly to provide care. This has led to concerns about the quality of care and the potential for further strain on the system. The current situation in China serves as a stark reminder of the importance of preparedness for epidemics of respiratory infections. It highlights the need for robust surveillance systems, access to vaccines and antiviral medications, and strong public health measures to mitigate the impact of these infections.

All these causative organisms spread to humans through the nose and the respiratory tract and the majority of them are exquisitely infectious, thereby leading to rapid spread of the diseases caused by them. One cannot help but reiterate the mantra of the usefulness of wearing masks, avoiding crowded places, maintaining reasonable distances from others and scrupulous washing of hands as time-tested means of preventing respiratory infections. Preparedness and proactive public health measures are crucial to mitigate the impact of future respiratory infection outbreaks. This aspect is particularly important for countries like Sri Lanka as the modern-day fast air travel could make it not too difficult for these infections to come into the country. It calls for cat-like vigilance on the part of our health authorities to enable them to act decisively when the occasion demands it.

As winter progresses, it remains crucial to monitor the situation closely and implement measures to protect vulnerable populations. By staying informed and taking precautions, we can help mitigate the impact of this ongoing health challenge. There is no cause for alarm as yet for us in this Pearl of the Indian Ocean but we need to follow the adage that “a stitch in time saves nine.”

by Jehan Perera

Among the important promises of the NPP government to the people has been to address the problem of corruption and waste.  This was the centre piece of the Aragalaya protests that brought down the government in 2022.    The government made many other promises too when it was in the opposition.  But unlike in the case of these other promises, such as to reduce the cost of living, the promise to reduce corruption and waste is within the power of the government to a greater extent than to bring down the cost of living which is determined by external factors more than by internal ones.  The  government has cut down on its costs considerably.  Its celebrations of its electoral victory and swearing in of the new president and parliament was on a low key.  The president took only a small delegation with him on his first official trip abroad to India.

 The government’s first hundred days in office was also remarkable for the absence of any financial scandals involving members of the government.  This is a noteworthy achievement in a context in which those in the seats of government have invariably been involved in deals with one party or the other.  Dealing with the problem of corruption which has infiltrated every level of society will be very challenging especially as those who live on fixed incomes cannot  meet their costs of living on their present salaries.  The government’s inability to keep its promises made regarding reducing the cost of living and increasing salaries is due to its inheriting a problem not of its own making, which includes being fettered by agreements entered into by previous governments.

 The government’s commitment to making Sri Lanka clean is manifested in its appointment of a Presidential Task Force for a clean Sri Lanka.  The task force aims to elevate the country through a comprehensive social, environmental, and ethical transformation.  It appears that the government has taken the position that change must begin at the top as those who are its members hold top positions in the government, including the president’s secretary, the commanders of the armed forces and police and senior heads of the urban development authority.  However, addressing concerns regarding its composition, ensuring inclusivity, focusing on the enforcement of existing laws, and providing clear programmatic details will need to be dealt with.

 NEGATIVE TROIKA

 An important task that the government has taken upon itself, apart from  seeking the elimination of corruption and waste, is to eliminate racism and extremism in  society.  The government appears to be taking this as a very serious matter.  The confidence in the people that the government is non racist can be seen in the mandate it received from the areas in which the ethnic minorities predominate, notably the north and east, but also the central regions.  However, the Task Force for a Clean Sri Lanka potentially overlooks the perspectives of important ethnic and religious communities. This lack of inclusivity may hinder the programme’s acceptance and effectiveness across diverse populations.

 It can be said that corruption, waste and racism are the troika of negative values that drove the country to the pit of despair.  The country lost a considerable part of its income and wealth due to its national resources being taken for private purposes and being destroyed in war.   A key reason for the escalating ethnic conflict that eventually resulted in protracted war was the feeling amongst the ethnic and religious minorities that they were disregarded, not included and discriminated against.  The fact that most of the government’s appointees to decision making  bodies, such as the cabinet, the deputy ministers and most recently, the Clean Sri Lanka task force, are from the Sinhalese community could evoke memories of the past.

 The government’s justification for its pan-Sinhala selections (as occurred even during the Donoughmore Constitution period in 1936) may be that the selections are based on merit and proven commitment.  The preference to trust one’s own kind goes back a long way.  In 1936, the Sinhalese leaders felt they could trust the Sinhalese best in demanding independence from the British and so they chose an all-Sinhala board of ministers to negotiate with the British.   At the same time the fact that Sri Lanka is an ethnically and religiously plural society in which the ethnic and religious minorities amount to as many as 30 percent of the population needs to be taken into consideration.

 RACIST POLITICS

 A key reason for including those of different ethnic, religious and gender backgrounds into decision making bodies is that they may see things differently than the way the majority sees things.  Having a more diverse representation in decision making  bodies may also slow down the speed of arriving at decisions.  But the discussion and debate that arises out of this mix of ideas and interests is often a solution that is more acceptable to a larger number and therefore more sustainable. Those who are left out of decision making  often feel they do not have ownership  of the solution that is being  arrived at.  They will then have little incentive to support it.

Those who are not a part of the decision making process and resentful of it will invariably have a vested interest in distorting and giving an incorrect picture of what is happening.  The clean Sri Lanka task force has already come in for false criticism for allegedly taking a decision to stop street vendors from selling their wares on the streets.  This was done during President Gotabaya Rajapaksa’s government, which ordered them to immediately stop their street trade, which caused immense hardship to thousands of small traders.  The clean Sri Lanka task force’s mandate to keep the environment clean has been distorted by those who are politically opposed to the government.

The importance of representation of ethnic and religious minorities in the government’s decision making bodies is that they will be able and willing to counter false propaganda that is created for the purpose of political advantage.  By failing to include them in decision making bodies, the government is opening the door to the re-emergence of ethnic and religious-based opposition, which the voters from the north, east and central regions rejected on this occasion.  Addressing this blind spot is not just about fairness—it is essential for long-term national unity and stability. There is a need for the government to consciously include ethnic and religious minorities at all levels of its governance structures to ensure the non-recurrence of racist politics.