The news from the US trade office was better than expected. Sri Lanka, which had been shocked by the sudden imposition of a 44 percent tariff by the U.S. authorities in April 2024, has seen it reduced to 20 percent. This is a major concession for a country that is perceived to have strong trading and political ties with China, which the US views as its main global rival. The revised tariff now brings Sri Lanka more closely to other Asian competitors such as India, Bangladesh, and Pakistan, whose exports faced significantly lower rates under the same policy in April of 27, 37, and 30 percent respectively. The sharp drop in tariffs followed the visit of a high-level Sri Lankan delegation to Washington DC and a virtual discussion in July by President Anura Kumara Dissanayake with US Trade Representative Ambassador Jamieson Greer.
The government is being judicious in reading the signs of the time. The country continues to be in the throes of the economic crisis that it inherited. It faces formidable challenges in confronting a combined opposition that governed Sri Lanka for the past 76 years. In addition, the world is in crisis with international law being openly disregarded in the joint US‑Israel bombardment of Iran’s nuclear sites. Faced with such turbulence, there is a need to tread carefully in this context and not get out of depth in experimenting with change based on ideological conviction. Governments of small and less developed countries especially need to balance their ideological visions with the structural constraints imposed by global power politics.