Business
US election outcomes and trade policy changes: What it means for Sri Lanka
By Dr Asanka Wijesinghe
Now that the United States (US) election has concluded, what direction will the US’s trade policy be headed? This is one of the burning questions that many of its trading partners are asking in the aftermath of the presidential election.
A costly trade war was the outcome of the tariff hikes in 2018 – under the first term of President Trump – which was followed by retaliatory tariffs from the US’s trade partners.
Elected for a second term, he is once again proposing significant tariff increases as trade policy measures. These potential hanges in US tariff policies will have a direct impact on Sri Lanka’s export industries. The US is the top individual export destination of Sri Lanka, accounting for 23.6% of its total exports (Figure 1).Market share of export destinations of Sri Lanka: 2023
The economic justification for a global tariff on imports and its efficacy in achieving the expected results – such as the reshoring of manufacturing employment to the US and price reduction – remains uncertain. This article mainly focuses on the adverse impacts of a tariff increase on Sri Lanka’s exports to the US.
Future of US Trade Policy
The consumer subsidy-based industrial policy, introduced under the Inflation Reduction Act by the incumbent US administration is expected to continue.
However, the effect of a tariff is more direct than a consumer subsidy. On the campaign trail, the US president-elect proposed 10 percentage points on US imports. This is understood as an additional 10% tariff, rather than a new minimum tariff. It implies that there will be an additional 10 percentage point tariff on the existing average tariff rate of 12.6% on the wearing apparel sector, for instance, if the proposed tariff is implemented
The precise rate of the tariff increase remains ambiguous, as a proposal for a 20% additional tariff was suggested later instead of the 10%. In addition, a 60% to 100% tariff is proposed on imports from China. Also, a more complex, country-specific retaliatory tariff schedule has been proposed to align US tariffs with the rates that the US products face in each country.
Effect of a US Global Tariff on
Sri Lankan Exports
An increase in the US tariffs is likely to reduce consumer demand for imported goods. Additionally, an economic downturn in the European Union (EU), triggered by a trade conflict between the US and its trading partners, could further suppress demand for Sri Lanka’s exports.
If an additional 20% tariff is applied on top of the existing average tariffs for all countries, estimates show that Sri Lanka’s exports to the US are expected to suffer a significant negative impact (Figure 2). For example, wearing apparel, Sri Lanka’s major export sector will experience a loss of USD 187.9 Million. As a percentage, this is a contraction of 8.1% from the base year, 2022.
According to the estimates, the proposed tariffs will severely impact Sri Lanka’s exports of rubber and plastic products, as well as other manufactured products like Christmas decorations, brooms and brushes (Figure 2).
As a percentage, about 90% of export loss can be expected in the chemical products sector which includes activated carbon, and essential oil.
If the US imposes a 60% to 100% tariff on imports from China, relatively high pricing on Chinese products could benefit countries like Sri Lanka from trade diversion.
However, the overall rise in import prices resulting from a broader trade war will drastically reduce the US demand for imports, limiting the gains from this trade diversion.
The US trade partners will retaliate with tariffs, similar to the China-US trade war in 2018. The proposed tariff is estimated to cost an average US household more than USD 2,600 a year, once retaliatory tariffs are factored into the analysis. Additionally, the slowdown of US growth, as a possible consequence of a tariff war, will further reduce the country’s import demand.
The spillover effects of tariff wars will also negatively affect Sri Lanka as the EU countries are expected to experience a substantial economic setback. It is estimated that the EU may see its GDP erode by 1.5%, or about Euro 260 billion.
An economic contraction in the EU will reduce the EU imports from Sri Lanka significantly. Thus, the estimated effects in this article can be considered only as the first-round effects.
Campaign Rhetoric or a Credible Threat? The ikelihood of Tariff Hikes and
Sri Lanka’s Options
A blanket tariff increase and an intense trade war between China and the US will drive up the domestic prices in the US, fuelling fear of inflationary pressure. Accordingly, it is unlikely that the proposed tariffs will be fully implemented given the significant impact of inflation on elections in the US.
As the protectionist measures target the US’s manufacturing sector, sub-sectors like light household equipment, decorations, metal products, and machinery may become more vulnerable to future tariff shocks.
These non-traditional exports of Sri Lanka play a major role in export diversification and are generally more complex and technologically sophisticated.
As a small exporting economy, Sri Lanka is susceptible to external factors that are beyond its control. Additionally, Sri Lanka’s limited role as a purchaser of US commodities limits its ability to negotiate lower tariffs. As a result, the toolbox of responses to future US tariff shocks contains only marginal adjustments.
These may include offering import tariff relief for raw materials and providing production subsidies, such as electricity subsidies, to support domestic producers in maintaining their competitiveness. A consultation with the producers in this regard will enable the government to determine the most effective policy measures.
In the medium term, given the global rise of protectionist and industrial policy measures in major export destinations, Sri Lanka will need to maintain preferential tariffs in other regions like the EU.
It will be vital for Sri Lanka to maintain the GSP+ preference and renewed attempts for increased cumulation to increase the GSP+ utilisation will benefit Sri Lanka.
As the expected high tariffs and the technical barriers in the US and the EU are probable in the future, Sri Lanka should maintain the trade policy reforms aiming to join regional trading blocs like the Regional Comprehensive Economic Partnership (RCEP).
Dr Asanka Wijesinghe is a Research Fellow at IPS with research interests in macroeconomic policy, international trade, labour and health economics.
He holds a BSc in Agricultural Technology and Management from the University of Peradeniya, an MS in Agribusiness and Applied Economics from North Dakota State University, and an MS and PhD in Agricultural, Environmental and Development Economics from The Ohio State University.
(Talk with Asanka – asanka@ips.lk)
Business
‘With AI around, hardly anyone does any real work,’ says university don
While the corporate world celebrates the merger of efficiency and ecology, a leading academic last week issued a sobering warning: the very technology driving the next “Green Revolution” may leave the human workforce behind.
Speaking at the recently concluded Green Productivity Awards, organised by the Sri Lanka Association for the Advancement of Quality and Productivity (SLAAQP), Professor Hiran Amarasekera of the University of Sri Jayewardenepura characterised Artificial Intelligence (AI) as a “godsend” for environmental sustainability – but one that carries profound social risks.
Professor Amarasekera’s keynote address cut through the celebratory atmosphere, targeting a perceived complacency among top-tier management.
“Managers are already using AI, but many CEOs, directors and managing directors remain sceptical,” he observed. “They think AI will come in another five years. No, it is already here.”
According to the Professor, AI is no longer a futuristic concept but a functional tool currently revolutionising green metrics. He highlighted how the technology is already replacing manual monitoring for energy optimisation, using predictive algorithms to drastically reduce industrial waste, and automating sustainability reporting – turning months of consumption data analysis into a task of mere seconds.
While these advancements provide a massive boost to the “bottom line” and help organisations meet the national Net Zero pledge, Prof. Amarasekera warned of a looming “danger”: the displacement of human workers.
“AI is boosting productivity while cutting back the need for human resources. What will happen to the jobs and the wider society? Not even the USA or other advanced economies have an answer to this,” he noted.
In a moment that elicited both laughter and reflection from the audience, he touched upon the irony of modern higher education: “Students produce their work through AI and we detect plagiarism through AI. So, with AI around, hardly anyone does any real work!”
The technological warning was balanced by the moral urgency of Senior Professor Ajith de Alwis from the University of Moratuwa. Invoking the words of David Attenborough, Prof. de Alwis asked the audience how they would look into the eyes of their grandchildren if they knew of the world’s collapse and did nothing.
The takeaway message of the evening was clear: While AI provides the tools to save the planet, human leadership remains the only force capable of managing the social consequences of that salvation.
Despite the warnings of future challenges, the SLAAQP awards proved that Sri Lankan industries are currently making notable strides. The event recognised 38 organisations – including 28 Gold Award winners – across sectors ranging from plantation, garments and rubber to poultry and textiles.
These winners were evaluated on four critical pillars: Leadership, Environmental Sustainability, Productivity Enhancement and Social Contribution.
By Sanath Nanayakkare
Business
Gemological Report of Ceylon sets new global benchmark for local gemstone certification
Steps into a critical void to earn recognition in international markets
For decades, Sri Lanka has been globally revered as the “Island of Gems,” yet the industry has long grappled with a paradoxical challenge: while the Sri Lankan soil yields the world’s finest stones, the local certification process has often struggled to command the same recognition in international markets.
Stepping into this critical void is the Gemological Report of Ceylon (GRC). Located at No. 97, Galle Road, Colombo 3, this newly launched laboratory is on a mission to redefine the standards of local gem certification, ensuring that the “fatherhood” of Sri Lankan gemstones remains firmly within its home soil.
Founded by Milinda Edirisinghe, a seasoned gemologist with over 20 years of experience in mining, trading, and geological study, GRC is the result of a lifelong observation of the industry’s “trust gap.”
“I saw a critical disparity,” says Edirisinghe, who received specialised training in Thailand, the global hub for gemstone treatments. “Sri Lankan exporters often face unfair skepticism in markets like Thailand, Hong Kong, and the US. International buyers often view local reports with doubt. I launched GRC to provide a local institute that is on par with the highest-caliber laboratories in the world.”
He made these comments while speaking to media at the new laboratory.
According to him, in its first month of operation, GRC has already seen a surge in demand, processing 30 to 40 stones daily – a success driven largely by its word-of-mouth reputation.

Milinda Edirisinghe performs a sensory inspection of a gemstone using a loupe to assess its initial characteristics
“The lab’s rapid growth is built on a foundation of total transparency. Unlike traditional setups, GRC employs a rigorous triple-blind screening process: three independent gemologists evaluate each specimen – from Sapphires, Ruby and Emeralds to semi-precious stones, polycrystals, rare meteorites, and even organic materials like natural Pearls, and rare coral species etc., used in high-end jewelry. By evaluating the stones without consulting one another, the three gemologists’ independent findings are then synthesised into a final, authoritative and error-free assessment,” he explained.
“As gemstone treatments become increasingly sophisticated – ranging from Beryllium diffusion to evolving heat and irradiation treatments – the need for advanced technology is paramount. GRC’s facility is equipped to identify the full spectrum of enhancements, ensuring the end consumer knows the exact “human intervention” history of their asset,” he further said.
However, Edirisinghe maintains that technology is a tool, not a replacement. When asked if AI could eventually handle the certification job alone, he noted:
“AI already assists our workflow to an extent, but a human gemologist remains an indispensable part of the process. Just as a surgeon uses advanced technology to enhance precision, they must still be present to execute the nuances of a complex operation. AI cannot truly ‘see,’ touch, or feel the soul of a stone.”
He further added, “AI can support our findings, but it cannot replace the gemologist’s ‘eye-view’ and the tactile senses that go a long way in issuing an accurate certification.”
Furthermore, GRC leverages an international expert network. “If we encounter a complex inclusion, we utilize virtual screen-sharing with leading labs in Thailand for real-time peer review,” Edirisinghe explains. “Our conclusions are science-based facts, not just opinions.”
Beyond technical excellence, GRC serves a vital economic purpose. Historically, local dealers spent thousands of dollars obtaining international certificates. GRC offers these world-class reports at a fraction of the cost, with detailed certificates starting from LKR 15,000 for full reports, a medium report at LKR 6,000, “memo cards” at LKR 1,500, and verbal opinions for LKR 500.
“By providing a credible, globally-recognised home-based laboratory, we are stemming the outflow of foreign currency to international labs,” said Edirisinghe.
With plans to participate in upcoming exhibitions in Dubai, Hong Kong, and the USA, GRC is positioning itself as a global contender. As the industry shifts toward “knowledgeable customers” who view jewellery as a liquid asset, GRC stands ready to provide the clarity and integrity the Sri Lankan gem industry deserves.
“If Sri Lanka produces the best stones in the world, it is only right that we also provide the world-class expertise to certify them. Our mission is to ensure that the ‘fatherhood’ of these precious stones remains in Sri Lanka, backed by a certificate that is respected from the USA to the European Union,” Edirisinghe said in conclusion.
By Sanath Nanayakkare
Business
Ministry of Brands to launch Sri Lanka’s first off-price retail destination
Sri Lanka’s retail landscape will reach a major milestone with the launch of Ministry of Brands (MOB), the country’s first off-price retailer. The flagship store is set to open on 16 February 2026, introducing Sri Lankan consumers to authentic global luxury and premium brands at discounts of up to 90% off original retail prices.
Backed by Akbar Brothers, Ministry of Brands brings the globally established off-price model to South Asia for the first time. The concept allows customers to shop for genuine designer and brand-name products at significantly reduced prices while supporting more sustainable retail practices.
The 10,000 sq. ft. flagship store, located at 28/9, Vajira Road, R.A. De Mel Mawatha, Colombo 4, will feature an extensive range across apparel, footwear, handbags, accessories, homeware, and more. Ministry of Brands will carry over 2,000 international and designer brands spanning womenswear, menswear, childrenswear, home, and accessories, including names such as Gucci, Ferragamo, Valentino, Michael Kors, Ralph Lauren, Burberry, Rag & Bone, Lacoste, Puma, UGG, HOKA, Brooks, Air Jordan, and many more.
Off-price retail is one of the fastest-growing global retail segments, helping fashion houses responsibly manage excess inventory. With the UN Environment Programme estimating 92 million tonnes of textile waste generated annually, sustainable retail models such as off-price are increasingly important.
“Sri Lanka manufactures for many of the world’s leading designer labels, yet these products have often remained out of reach for local consumers,” said Director of Ministry of Brands, Aamir Akbarally. “Through off-price retail, we are proud to make genuine designer brands more accessible to our fellow Sri Lankans, offering premium fashion at affordable prices while delivering a world-class shopping experience built on Akbar Brothers’ longstanding values of integrity, quality, and trust.”
Ministry of Brands Director, Ramzey Hammoud added: “With decades of experience in off-price retail, we see this as an exciting new growth chapter for Sri Lanka’s retail landscape. Our goal is simple: to allow customers to shop global designer brands locally at the best prices, while rediscovering the thrill of the find through a constantly changing, treasure-hunt shopping experience.”
Following the Colombo flagship launch, Ministry of Brands will open a second location at the One Galle Face Mall, with plans to expand across South Asia and Australia.
-
Life style2 days agoMarriot new GM Suranga
-
Midweek Review6 days agoA question of national pride
-
Features2 days agoMonks’ march, in America and Sri Lanka
-
Business6 days agoAutodoc 360 relocates to reinforce commitment to premium auto care
-
Opinion5 days agoWill computers ever be intelligent?
-
Features2 days agoThe Rise of Takaichi
-
Features2 days agoWetlands of Sri Lanka:
-
Business15 hours agoMinistry of Brands to launch Sri Lanka’s first off-price retail destination



