The GSP+ concession granted to Sri Lanka by the European Union is set to expire in 2027, and in parallel, the International Monetary Fund says that the tariff imposed on Sri Lanka by the United States under the “reciprocal tariff system” also poses a significant risk to the country’s economy.
The institutions also expect that the Sri Lankan economy will be severely affected by the tariff imposed by the United States at an initial level of 44% and currently reduced to 30%. Discussions between Sri Lanka and the US Trade Representative’s Office are ongoing to further reduce this tariff.
The IMF has stated that there is a significant risk to the external sector of the country’s economy, especially trade, due to global uncertainties. However, sources say that the IMF is waiting for the negotiations with the US to conclude and a final decision on the tariff to be made to determine the seriousness of this risk.
The tariff is reported to have an impact on the country’s trade activities, the livelihoods of Sri Lankans through job losses, and the country may also lose revenue.
The US tariff is likely to pose a significant risk to the country’s economic prospects as well as major export industries such as garments, tea, rubber, and coconut. These industries are major contributors to Sri Lanka’s foreign exchange earnings, and any impact on them will affect the entire economy.