Government’s Tariff Reform Amid US Trade Pressure
Sri Lanka has begun consultations on a proposed Four-Band Tariff Policy under the 2026 Budget, aiming to streamline duties and support domestic industries as the United States raises tariffs on selected Sri Lankan exports.
The reform, developed with World Bank support, seeks to align Sri Lanka’s tariff structure with UN international classifications to improve transparency and predictability. Officials say the move will strengthen exports, enhance competitiveness, and ensure fiscal sustainability.
However, analysts warn that higher US tariffs could weaken export earnings, affecting foreign exchange inflows and tax revenues. Since customs duties remain a key revenue source, tariff restructuring must be carefully calibrated to avoid fiscal shortfalls.
Financial sector stability is also under scrutiny, as export-oriented firms depend heavily on trade finance from local banks.
The Government says stakeholder feedback will shape final revisions before implementation, ensuring trade policy reforms support long-term economic recovery and macroeconomic stability.
