Colombo, Jul 24 (PTI) Sri Lanka on Friday welcomed the US decision of lowering to 10 per cent the tariff on goods imported from the island nation saying it will send a strong signal to investors about the country’s economic reforms.

The US imposed the 10 per cent tariff on goods imported from Sri Lanka, India, Pakistan, Bangladesh and 13 other countries as part of a wider action against products made using forced labour.

The decision to lower tariffs from 12.5 per cent to a minimum of 10 per cent was a result of Sri Lanka’s decision to ban the import of goods produced using forced labour.

“The move is expected to deliver positive results for exporters, while reflecting Sri Lanka’s ongoing commitment to fair trade, responsible business practices, and internationally accepted labour standards,” a statement from the Ministry of Finance said.

The tariff reduction will enhance the competitiveness of Sri Lankan exports in the US market, sending a strong signal to investors and buyers about the country’s dedication to sustainable economic reforms, it added.

The island’s main trade chamber, reacting to the US decision, said, “The reduction will provide some relief to exporters navigating a highly competitive and uncertain market place.” Under the ‘Trump Tariffs’ announced in early 2025, Sri Lanka was billed to pay a reciprocal tariff rate of 44 per cent, which if implemented, was to have a devastating effect as the US is Sri Lanka's single largest export market.

The local exporters then feared that the 44 per cent tariff would have been non-competitive and would push Sri Lankan exports out of the US.

Later, Sri Lanka's tariff was brought down to 20 per cent alongside those of Vietnam, Bangladesh, Thailand, Indonesia, and Cambodia.

In February this year, the US Supreme Court struck down and invalidated the reciprocal tariffs.

In early June, the US imposed a 10 per cent tariff for 15 countries that had enforced forced labour import prohibitions and a 12.5 per cent for 45 countries with no such prohibitions.

On July 10, President Anura Kumara Dissanayake gazetted Sri Lanka’s prohibition on the importation of goods produced using forced labour.

As a result, it was announced by the US on Thursday that Sri Lanka was moved from 12.5 to 10 per cent due to the gazette on labour prohibition. PTI CORR NPK NPK

Forced-labour import prohibition enabled lower tariff treatment for Sri Lankan goods, supporting export competitiveness and responsible trade practices. Tariff treatment for Sri Lankan goods entering the United States was reduced after Sri Lanka prohibited imports of goods produced using forced labour. The prohibition placed Sri Lanka within the lower tariff category under the stated US framework. The reduction is described as supporting exporter competitiveness while reflecting commitments to fair trade, responsible business practices, internationally accepted labour standards, and sustainable economic reforms.