The recent warning issued by US President Donald Trump on imposing additional trade tariff of 25% on countries engaged in trade with Iran has increased concerns on whether Sri Lanka’s export recovery could face fresh uncertainty if Trump proceeds with the warning as it could expose Sri Lankan exports to an additional 25% tariff due to the country’s trade links with Iran.
Economists have noted that Iran continues to remain among the top 10 buyers of Sri Lankan tea, importing around 9,800 metric tonnes every month, making it a significant market for the island’s key agricultural export
On the other hand, the US is Sri Lanka’s single largest export destination, accounting for about 25% of total exports and generating nearly US$ 3 billion in annual export revenue. Hence, any new tariffs imposed by Washington DC could have a serious impact on Sri Lanka’s export earnings and competitiveness, according to economists.
The concern follows a strong statement by Trump, who announced that any country doing business with Islamic Republic of Iran would face a 25% tariff on all trade with the US.
“Effective immediately, any country doing business with the Islamic Republic of Iran will pay a tariff of 25 percent on any and all business being done with the United States of America. This order is final and conclusive,” Trump said.
Sri Lanka is already subject to a 20% tariff on exports to the US, which was negotiated following Trump’s ‘Liberation Day’ tariff shock announced in April 2025 and an addition of a further 25% tariff would significantly raise the cost of Sri Lankan goods for American consumers, potentially reducing demand and hurting exporters.
According to Arutha Research, such a move could undermine Sri Lanka’s fragile economic recovery and limit its ability to trade freely with global markets, particularly at a time when export growth is seen as critical to sustaining economic stability. Arutha has further noted that policymakers and exporters would need to closely monitor developments and assess potential risks to Sri Lanka’s trade relationships amid escalating geopolitical and trade tensions.
The Sri Lankan government is meanwhile continuing with negotiations with the US on finalizing the trade tariff for Sri Lankan exports to the US.
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