Trump settles for 30% tariff on Sri Lanka, down from 44% proposed earlier

US President Donald Trump has settled for a 30% tariff on imports from Sri Lanka, down from 44% proposed in April.

He announced the move in a letter to President Anura Kumara Disanayake dated 9 July 2025.

Analysts welcomed the move, which is lower than the tariff slapped on Laos and Myanmar (40%), Cambodia, Thailand (36%), Bangladesh (35%), and Indonesia (32%). However, others described it as higher than what Sri Lanka was lobbying for, which was 20%.

Japan, Malaysia, and the Philippines have been slapped with a 25% tariff.

The US remains the largest export market for Sri Lanka, accounting for 27% ($ 3 billion) of the total manufactured exports ($ 12.8 billion) as of 2024—out of which textile and apparel exports accounted for 64% of the total exports

to the US.

The reciprocal action by Trump was due to the trade imbalance of $ 2.6 billion in 2024 in favour of Sri Lanka as against the US.

Treasury Secretary Dr. Harshana Suriyapperuma earlier this week expressed hope that Sri Lanka could expect a favourable stance from the US on the looming reciprocal tariffs.

“We had several rounds of discussions with the US Trade Representative (USTR). They’ve indicated Sri Lanka is in a relatively better position, but at the end of the day, the decision will factor in the broader global trade scenario,” he told journalists. “Our hope is that given our proactive engagement, multiple discussion rounds, and overall cooperation with the USTR, Sri Lanka will get a positive stance,” Dr. Suriyapperuma reiterated.

The Free Trade Zone Manufacturers’ Association (FTZMA) this week warned that Sri Lanka’s economy could face a significant blow from the proposed tariffs by US President Donald Trump, leading to a loss of up to 50,000 jobs in the initial phase, and undermine the country’s competitiveness across South and Southeast Asia. (See https://www.ft.lk/front-page/Sri-Lanka-faces-50-000-job-loss-risk-amid-looming-US-tariffs-FTZMA/44-778692).

Trump in his letter, however, misspelt President Disanayake’s first name as Aruna.

Following are excerpts from Trump’s letter.

It is a great honour for me to send you this letter in that it demonstrates the strength and commitment of our trading relationship and the fact that the United States of America has agreed to continue working with Sri Lanka, despite having a significant trade deficit with your country. Nevertheless, we have decided to move forward with you, but only with more balanced and fair trade. Therefore, we invite you to participate in the extraordinary economy of the United States, the number one market in the world, by far. We have had years to discuss our trading relationship with Sri Lanka and have concluded that we must move away from these long-term, and very persistent, trade deficits engendered by Sri Lanka’s tariff, and non-tariff policies and trade barriers. Our relationship has been, unfortunately, far from reciprocal.

Starting on 1 August 2025, we will charge Sri Lanka a tariff of only 30% on any and all Sri Lankan products sent to the United States, separate from all Sectoral Tariffs. Goods transhipped to evade a higher tariff will be subject to that higher tariff. Please understand that the 30% number is far less than what is needed to eliminate the trade deficit disparity we have with your country. As you are aware, there will be no tariff if Sri Lanka or companies within your country, decide to build or manufacture products within the United States and, in fact, will do everything possible to get approvals quickly, professionally and routinely – in other words, in a matter of weeks.

If for any reason you decided to raise your tariff, then whatever the number you choose to raise them by, will be added onto the 30% that we charge. Please understand that these tariffs are necessary to correct the many years of Sri Lanka’s tariff and Non-Tariff policies and trade barriers causing these unsustainable trade deficits against the United States. This deficit is a major threat to our economy and, indeed, our national security.

We look forward to working with you as your trading partner for many years to come. If you wish to open your heretofore closed trading markets to the United States and eliminate your tariff, non-tariff policies and trade barriers, we will perhaps consider an adjustment to this letter. These tariffs may be modified, upward or downward, depending on our relationship with your country. You will never be disappointed with The United States of America.

Thank you for your attention to this matter.

With best wishes, I am,

Sincerely

Donald Trump

President of the United States of America.

IMF Backs Sri Lanka’s Plan to Transform Economy

Sri Lanka has unveiled a reform agenda aimed at unlocking long-term growth and resilience, as outlined in the latest International Monetary Fund (IMF) Staff Report released this July.

At the heart of the reform package is a renewed focus on trade liberalization and export competitiveness.

The government plans to rationalize para-tariffs with due consideration to revenue implications, streamline customs procedures in line with Trade Facilitation Agreement recommendations, and implement a National Export Strategy with a focus on expediting negotiations of Free Trade Agreements and entry into regional trade blocs.

These efforts are part of a broader National Export Strategy designed to integrate Sri Lanka into global value chains and elevate key sectors such as industrial manufacturing, information technology, business process outsourcing, and tourism.

The report emphasizes that private sector empowerment will be crucial to sustaining growth.

With support from international development partners, Sri Lanka aims to cut bureaucratic red tape, modernize its regulatory framework, and reduce electricity costs through a more efficient energy mix.

A significant shift is also underway to reduce the public sector’s footprint in the economy, thereby fostering competition and improving resource allocation. Additionally, the introduction of a digital land titling and registry system is expected to enhance property rights and facilitate investment.

In a forward-looking move, Sri Lanka is also prioritizing climate resilience amid escalating environmental threats. The report notes a sharp rise in climate-related disasters, which have jeopardized food security and livelihoods. To counter these risks, the government is ramping up investments in renewable energy, particularly solar and wind, with financing expected from both private and multilateral sources. Technical capacity-building initiatives are also underway to fast-track climate mitigation and adaptation strategies.

Three Arrested Based on Revelations by Sivanesathurai Chandrakanthan alias Pillayan, Interrogated Under PTA

Police have confirmed that three individuals arrested based on revelations made by Sivanesathurai Chandrakanthan, commonly known as Pillayan, are currently being detained and interrogated.

According to police, the suspects are being held under the Prevention of Terrorism Act for a period of 72 hours for questioning.

One of the arrested individuals is reportedly a close associate of Pillayan. He was taken into custody by the Criminal Investigation Department yesterday in the Kalmunai area over alleged involvement in murders and abductions.

In addition, former Eastern Provincial Council member K. Pushpakumar, also known as Iniya Bharathi, and another individual named Sivalingam Thavaseelan were arrested the day before.

Police said these arrests were made following information uncovered during the interrogation of Pillayan, in connection with ongoing investigations into several homicide cases.

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Sri Lanka, Germany discuss boosting healthcare sector

An official of the Delegation of German Industry and Commerce in Sri Lanka (AHK Sri Lanka), has met with Health Minister Nalinda Jayatissa to present a position paper on the country’s healthcare sector.

The position paper outlined key challenges faced by the healthcare industry; potential risks these challenges pose to patient safety; and a set of internationally recommended best practices to address these issues effectively and sustainably, AHK Sri Lanka said in a statement.

“Both parties recognized the importance of establishing a structured platform for continuous dialogue between the Ministry of Health and German healthcare stakeholders.

“This initiative aims to bridge regulatory and operational gaps and foster collaboration to ensure the highest standards of healthcare delivery for Sri Lankan citizens.”

AHK Sri Lanka also stressed the need to accelerate the digitalization of healthcare-related processes — especially in product registration and supply chain traceability.

“These improvements are essential to enhancing transparency, operational efficiency, and investor confidence, while also encouraging increased foreign direct investment in the sector.

Klose highlighted the longstanding presence and contribution of German healthcare companies Siemens, B. Braun, Linde, Fresenius, Dräger, and ZEISS which have supported Sri Lanka’s healthcare sector over the years.

AHK Sri Lanka extended an invitation to the Ministry for continued collaboration in areas such as training, capacity building, knowledge-sharing, and the transfer of technical know-how from Germany’s healthcare system.

CM Stalin inaugurates 729 newly built houses in Sri Lankan Tamils’ Rehabilitation camps

Chief Minister MK Stalin on Monday inaugurated 729 newly built houses, constructed at a cost of Rs 38.76 crore, in Sri Lankan Tamils’ rehabilitation camps across five districts of the state, via video conference from the Secretariat. Minister for Revenue and Disaster Management K K S S R Ramachandran and Chief Secretary N Muruganandam were present on the occasion.

As per the announcement made in the State Assembly under Rule 110 in August 2021 — to improve the living conditions of Sri Lankan Tamils residing in 67 camps across 26 districts — the Tamil Nadu government has undertaken several measures, including the construction of new houses and the repair and renovation of existing ones, according to an official statement.

The newly constructed houses are located in camps in Villupuram, Tiruppur, Salem, Dharmapuri and Virudhunagar districts. Additionally, the government has initiated works to enhance basic amenities in the camps, such as roads, electricity lines and drinking water supply, at a cost of Rs 7.33 crore.

In the first phase of the rehabilitation programme, the government had issued an order to construct a total of 3,510 houses at Rs 180.34 cr in 35 camps. So far, a total of 2,781 houses were constructed in 32 camps across 18 districts and handed them over to the beneficiaries.

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Who is Iniya Bharathi? Pillaiyan’s Strongman Arrested Over Killings, Abductions, and Torture in the East

Kumaraswamy Pushpakumar, better known by his alias Iniya Bharathi, was arrested on 6 July alongside a close associate in a major breakthrough linked to a string of serious crimes committed during Sri Lanka’s post-war period. A prominent figure in Eastern Province politics and a former Eastern Provincial Council member, Bharathi also served as the Ampara District organiser of the Tamil Makkal Viduthalai Pulikal (TMVP), a party formed from a breakaway faction of the LTTE.

The arrest was carried out by the Criminal Investigation Department (CID) based on new information uncovered during the interrogation of TMVP leader and former State Minister Sivanesathurai Chandrakanthan, alias Pillaiyan, who has been in detention under the Prevention of Terrorism Act (PTA) since April this year.

Both suspects were taken into custody in Thirukkovil and Sandiveli by the CID’s Homicide and Organised Crime Investigation Unit. Investigations revealed that Bharathi, now 45, was a former LTTE member who defected in 2004 to join the Karuna Amman-led faction. He is believed to have operated an armed camp in Thirukkovil before moving into mainstream politics. In 2007 and 2008, he held the post of Presidential Coordinating Officer for the Ampara District and went on to serve as a Provincial Councillor from 2012 to 2015.

According to police, Bharathi and his associate are suspected of being involved in a series of grave crimes in the Eastern Province between 2005 and 2008. These include:

The murder of Tamil National Alliance (TNA) MP Ariyanayagam Chandranehru and five others in Pulliyankulam, Welikanda on 7 February 2005.
The killing of Johnson Jayakanthan, alias Sindhujan, on 9 May 2007.
The assassination of Thirukkovil Pradeshiya Sabha Chairman Pillainayagam Udayakumar on 28 June 2007.
The abduction of Pavie Sivananthan Alagurasah in Thirukkovil on 27 July 2007.
The double murder of Grama Niladhari officers Nagarasa and Kanaga Anandhi in Kalmunai on 20 April 2008.
The abduction and killing of Pandith Thirumal Thiruvelvam in Vinayagapuram on 25 September 2008.
The shooting and murder of Pachchi Rasaiya Kopulan on 21 November 2008 in Vinayagapuram, during which his mother was seriously wounded.
Iniya Bharathi and his accomplice are also suspected of involvement in an arson attack on the Akkaraipattu Magistrate’s Court Complex in December 2022.

The Police Media Division confirmed that Bharathi had been previously named in the Lessons Learnt and Reconciliation Commission (LLRC) report and other investigative records as having directly participated in killings, enforced disappearances, torture, and firearm-related crimes during the war-era in the Eastern Province.

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Renewable energy project cancellation : Adani tells Govt to reimburse initial cost

The government, which scrapped the Adani renewable energy projects, is now under duress to reimburse a few million U.S. dollars incurred by the company here initially, Daily Mirror reliably learns.

India’s Adani Green Energy informed the Sri Lanka government earlier that it would withdraw from two proposed wind power projects. The company took that decision after Sri Lanka, under the new government led by the National People’s Power ( NPP) , sought to lower the cost of the power generated. The NPP government disagreed with the cost agreed upon by the last government which struck the project with Adani.The company was to build a wind power plant project in the Mannar and Pooneryn towns in the northern province, investing $442 million.

The project was expected to add at least 350 MW to the national grid by 2025.The company authorities sent a letter to the government authorities in May , this year asking for reimbursement of expenses it made initially for research and investigation along with the Sustainable Energy Authority (SEA) in Sri Lanka.

However, the company has not yet specified the exact amount which is to be assessed covering all expenses including US $ 3 million paid to the SEA.The Power and Energy Ministry is yet to make a decision on the reimbursement. Asked about the current status , a top official said that legal advice would be sought in this regard .

“If there is any payment, it will be done only through Cabinet approval,” he said.

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India-Sri Lanka grid connectivity: CEB awaits joint technical report

The much-anticipated electricity grid connectivity project between Sri Lanka and India is progressing steadily, with the State-run Ceylon Electricity Board (CEB) set to make key policy decisions following the submission of the joint technical committee’s feasibility report.

According to CEB Chairman and Energy Ministry Secretary Prof. Udayanga Hemapala, technical experts from both countries have completed site visits and thorough evaluations, with the Government now awaiting the detailed findings.

As highlighted in the latest Long-Term Generation Expansion Plan (LTGEP) 2025-2044 issued by the CEB, the interconnection project has a long history of collaborative studies and planning.

The concept originated in 2002 with a pre-feasibility study by Nexant, supported by the United States Agency for International Development (USAID).

This was followed by an updated review by India’s PowerGrid in 2006 and a Memorandum of Understanding (MOU) signed by both Governments in 2010 to conduct an in-depth feasibility study.

Joint efforts by the CEB and India’s Power Grid Corporation have since analysed multiple technical, economic, and regulatory aspects, considering various route options including overhead lines and undersea cables.

The Asian Development Bank (ADB) also funded an economic and financial feasibility assessment to support the project.

While both synchronous and asynchronous grid interconnections were initially considered, the fourth Joint Working Group meeting had favoured an HVDC link for its controlled power flow and enhanced system stability.

The finalised plan includes a ±320 kV, 2×500 MW HVDC link using Voltage Source Converter (VSC) technology, running from Madurai to Mannar. The technology also provides dynamic reactive power support, critical for integrating renewable energy sources and maintaining grid stability.

In 2023, a significant decision was made to shift the HVDC termination point on the Sri Lankan side from New Habarana to Mannar, recognising the additional benefits of harnessing wind energy resources in the Mannar region. This change also prompted further analysis of undersea cable options due to the complexities of operating and maintaining overhead lines over the sea.

The project will be implemented in two phases, with the first phase targeting 500 MW capacity at an estimated cost of $ 1,225 million. This phase will use undersea cables designed to eventually support up to 1,000 MW.

The second phase, which will add a further 500 MW capacity, is planned based on future demand for power exchange between the two countries, as stated in the LTGEP.

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Former Eastern Provincial Council Member Iniya Bharathi Arrested

Ampara District Organizer of the Tamil Makkal Viduthalai Pulikal party and former member of the Eastern Provincial Council K. Pushpakumar alias Iniya Bharathi has been arrested.

He was arrested over the abduction and disappearance of the former Vice Chancellor of the Eastern University Prof. Subramaniyam Ravindranath.

Sivanathurai Chandrakanthan, alias Pillayan, the leader of the Tamil Makkal Viduthalai Pulikal (TMVP) and former State Minister, was arrested by the Colombo Criminal Investigation Department at his office in Batticaloa on April 8, over this incident.

He was later detained for 3 months under the Prevention of Terrorism Act.

Iniya Bharathi, also known as Kumaraswamy Pushpakumar, was arrested based on information revealed during the interrogation of Pillayan.

Train schedule on Northern Line amended

The Department of Railways has taken steps to amend train schedules on the Northern Line following requests made by the public.

Due to the high demand, the Intercity Express train, which previously operated only on weekends, will now run daily between Mount Lavinia and Kankesanthurai starting tomorrow (07), according to the Department of Railways.

Furthermore, the departure time of the “Yaal Devi” train from the Colombo Fort station to Kankesanthurai, previously at 5:45 a.m., has been revised.
Accordingly, the Department of Railways announced that the new departure time from Colombo Fort will be 6.40 a.m. starting tomorrow.

Passengers who reserved seats on the “Yaal Devi” train a month in advance have also been advised to note the new departure time of 6.40 a.m.