ECONOMYNEXT – Sri Lanka is planning to make proposals to cut the trade deficit with the US Tuesday in a bid to reduce the 44 percent tax imposed by President Donald Trump, Deputy Economic Development Minister Anil Jayantha said.
A committee appointed to come up with a plan reduce the tariff, along with himself and Deputy Minister of Finance and Planning, Harshana Suriyapperuma had met representatives office of US Trade Representative in a virtual meeting.
The Trump tariff of 44 percent, said to represent import tariff and other non-tariff barriers is a calculation made from dividing the trade deficit with imports by the US and dividing it by two.
” From the side of US they have given the idea for us make proposals to reduce the trade deficit,” Minister Jayantha said.
“So we have to look for ways on how to reduce the trade deficit, and also to make changes to the import duty structure. We have appointed a committee to do that. Each day they are meeting.”
Sri Lanka has met with Assistant US Trade Representative for South and Central Asia Brenda Leach and Emily Ashby Director of the South Asia Office of the Trade Representative, in a virtual meeting and is hoping to make formal proposals next week.
Sri Lanka has suggested a virtual meeting on Tuesday and is awaiting confirmation, Deputy Minister Harshana Suriyapperuma said.
Sri Lanka’s tariffs for pharmaceuticals is already zero, the highest import duty is 20 percent and the highest PAL is 10 percent, Minister Jayantha said.
Even if rates are brought down there may not be much imports from the US, he said.
“Therefore we are prepared to make proposals to increase imports,” he said without elaborating.
Sri Lanka charges VAT on import on top of duty and PAL, and there are also CESS, which was originally to be charged on exprots, which is a tax that may not be recognized by the World Trade Organization.
There are very high CESSes charged on some good including foods to allow key businessmen with political connections to gouge customers, critics have said.
The taxes also make it impossible to produce export competitive goods outside of zones, and may be contributing to malnutrition, critics have said. (Colombo/Apr06/2025 – Corrected headline/meeting Tuesday not next week)