Sri Lanka needs strategic rethink amid crushing US tariffs: Bingumal

Monday, 7 April 2025 05:39 - - {{hitsCtrl.values.hits}}

Opines country should adopt ‘extreme measures’ to counteract looming economic hit
Lists three-point strategy – buy more from US at lower import tariff while managing other bilateral partners, diversify export markets with UK, Europe and Asia being target markets, incentivise export sector along with hard negotiation with IMF
Observes opportunity in emerging regional dynamics, with South-South trade growing at over 20% in global trade where Sri Lanka can reposition itself
Expresses optimism that Sri Lanka will find its way

Standard Chartered Bank Sri Lanka CEO Bingumal Thewarathanthri

Standard Chartered Bank Sri Lanka CEO Bingumal Thewarathanthri last week weighing in on the development of the US’s newly announced reciprocal tariff policy opined that the country should adopt ‘extreme measures’ to counteract the looming economic hit.

“What a surprise! The US reciprocal tariff has hit us hard. We need some extreme measures to counter this,” he wrote in a candid LinkedIn post.

On 2 April, the Trump administration announced a reciprocal tariff policy which sent shockwaves through Sri Lanka’s economy, with the country facing one of the highest imposed tariffs at a staggering 44%, placing it among the top three globally penalised countries.

Acknowledging that Sri Lanka had anticipated action from the US, Thewarathanthri admitted the severity and clinical nature of the tariff policy caught most off-guard.

“We did (see it coming). I don’t think anyone knew the rates. It’s a very clinical approach. We need to respond with substance,” he noted, responding to a comment.

He listed out a pragmatic three-point strategy. First, he suggested buying more from the US at reduced import tariffs to rebalance the trade asymmetries, while simultaneously maintaining equilibrium with other key bilateral partners. Secondly, he advocated for export market diversification, identifying the UK, Europe, and Asia as urgent alternate export markets for Sri Lankan goods. Lastly, he underscored the need to incentivise the export sector domestically – potentially necessitating tough negotiations with the International Monetary Fund (IMF) to allow more policy flexibility within Sri Lanka’s debt restructuring and fiscal discipline framework.

Although the blow from the US tariffs is undeniably steep – particularly for the $ 5.5 billion apparel sector, which sends over 40% of its exports to the US – Thewarathanthri remains cautiously optimistic.

“I’m sure Sri Lanka will find its way,” he noted.

With South-South trade now accounting for over 20% of global trade, he observed opportunity in emerging regional dynamics, where Sri Lanka can reposition itself as a smart, strategic trading partner.

“Fact of the matter is globalisation has changed its course. Countries have to be more agile, diversify, and bet on market know-how (tacit knowledge). With South-South trade growing at a rate of over 20% in global trade, Sri Lanka should see opportunities,” Thewarathanthri said.