- Assesses impact on exporters
- Trade Ministry awaiting embassy communication to chart next steps
Sri Lanka is actively evaluating the immediate impact on its vital export sector following a landmark United States Supreme Court ruling that struck down sweeping reciprocal tariffs, prompting the White House to implement a new unilateral 10% import surcharge.
The sudden judicial setback in Washington determined that the use of emergency powers to levy broad reciprocal tariffs exceeded presidential authority.
This ruling shifted the focus back to existing legislative frameworks. Consequently, US President Donald Trump quickly invoked Section 122 of the Trade Act of 1974 to announce the new 10% surcharge across the board.
This specific provision allowed the Executive branch to address serious balance of payments deficits for a period of 150 days.
Ministry of Trade, Commerce, Food Security, and Cooperative Development Secretary K. Vimalenthirajah stated that the Sri Lankan Government had taken a highly cautious approach as the legal and economic situation continued to evolve.
“We cannot comment in detail at this time because we are unaware of their alternative approach. We are currently observing the situation as it develops based on the recent Supreme Court judgment,” Vimalenthirajah stated.
He emphasised that the 150-day provision appeared to be an already measured term of how the US was deploying its trade policy. He clarified that this newly announced surcharge existed entirely within the established legal framework of the US.
“The 10% surcharge being discussed is an across-the-board measure. It is a standalone action by default because the legal provision already exists within their framework. We also have provisions in our own Customs Ordinance to impose such surcharges when necessary,” Vimalenthirajah explained.
The history of trade relations between the two nations has been marked by significant and rapid shifts over the past year. In April 2025, Sri Lanka was initially faced with a proposed 44% reciprocal tariff. This figure was later negotiated down to 20% in August, following high-level bilateral discussions.
In exchange for this tariff reduction, Sri Lanka granted various concessions, which included lowering domestic duties on over 2,000 industrial goods and making firm commitments to purchase US energy products.
With the US Supreme Court now invalidating the previous tariff structure, serious questions have arisen regarding the legal status and continuity of these bilateral trade agreements. When questioned about whether the existing agreement would be automatically nullified by the newly announced unilateral measures, the Secretary indicated that a thorough legal review was necessary.
“That is an aspect we need to examine carefully because it involves a complex legal instrument. We will have to wait and see what their exit strategy entails and how they plan to follow up with us regarding existing agreements,” Vimalenthirajah noted.
The Secretary further noted that while the Sri Lankan Government possessed some preliminary information regarding the potential next steps, it was absolutely vital for officials not to act or speak prematurely. He stressed that any official stance must be carefully considered and strategically planned to avoid negatively affecting the national interest.
Sri Lanka remains heavily reliant on the US market. This single market historically accounts for nearly a quarter of total merchandise exports from the island nation. The domestic apparel sector, in particular, has faced immense pressure to maintain its global competitiveness against regional manufacturing rivals like Vietnam and Bangladesh amidst the continuously fluctuating tariff landscape.
The Ministry of Trade, Commerce, Food Security, and Cooperative Development continues to wait for official communication from the Sri Lankan Embassy in Washington to determine the precise path forward.