THE IMPACT OF U.S. RECIPROCAL TARIFFS ON SRI LANKA’S FISHERIES TRADE

 Aruna Maheepala -  15^th April 2025

The recent revival of the United States (U.S.)' "reciprocal tariff" policy marks a significant shift in global trade dynamics (ANI, 2025). President Donald Trump’s first term also marked the U.S. shift toward an “America First” trade policy, rooted in economic nationalism and the belief that trade is a zero-sum game where the U.S. Under this policy, the US aims to impose tariffs equivalent to those levied by its trading partners on American goods (Sheldon et al., 2018). The core idea is that the U,S should impose tariffs on imports from countries that maintain higher tariffs on U.S. goods, thereby creating symmetry or reciprocity in trade duties (The White House, 2025). This policy is seen as a response to years of trade deficits and domestic political pressure to protect American industries and jobs (Adam S. Hersh and Josh Bivens, 2025). U,S imposed a 44% reciprocal import tariff on Sri Lankan goods, making Sri Lanka one of the most heavily targeted countries under the U.S. reciprocal tariff policy (Fisher, 2025). 

This tariff applies across all Sri Lankan exports to the U.S., regardless of any existing trade arrangements (M.Jayawardana, 2025). The U.S. administration justified this high rate by citing imbalances in trade duties and a lack of reciprocity in market access. As a result, Sri Lankan exporters now face a severe disadvantage in the U.S. market, threatening key sectors such as fisheries, apparel, and rubber products (Mohan, 2025). With the U.S. being Sri Lanka’s top export destination, this policy poses a direct risk to the country’s foreign exchange earnings, employment, and trade competitiveness. Fortunately, on April 10, 2025, President Donald Trump announced a 90-day pause on all “reciprocal” tariffs, except those imposed on China (Powell, 2025). This temporary suspension gives affected countries, including Sri Lanka, an opportunity to take necessary actions to mitigate negative impacts and engage in negotiations with the U.S

Sri Lanka has faced ongoing trade imbalances over the past decade. Export growth has been modest, showing challenges in competitiveness and reliance on external markets. Between 2010 and 2023, Sri Lanka's total exports fluctuated between US$ 8.6 billion and US$ 13.1 billion, while imports consistently remained higher, peaking at over US$ 22 billion in 2018. The trade deficit has been a recurring issue, with the highest gap recorded in 2018 at US$ -10.34 billion. Despite occasional narrowing, such as in 2023, when the trade deficit dropped to US$ -4.9 billion. The only significant improvements in the trade deficit occurred in 2020 and 2023, largely due to import contractions likely linked to pandemic-related economic disruptions and import restrictions (European Commission, 2025). 

The US has long been one of Sri Lanka’s major trading partners, playing a key role in the country’s export earnings. Between 2011 and 2023, the U.S. consistently ranked among Sri Lanka's top export destinations. Between 2011 and 2023, the U.S. consistently ranked among Sri Lanka's top export destinations, accounting for an average of 24–27% of the country’s total annual exports. In absolute terms, Sri Lankan exports to the US rose from US$ 2.14 billion in 2011 to a peak of US$ 3.32 billion in 2022, before falling to US$ 2.77 billion in 2023. From 2015 to 2020, the US accounted for about one-fourth to over a quarter of total exports, a concentration that poses a strategic risk. Any adverse policy change in the US, such as the newly introduced reciprocal tariffs, can therefore disproportionately affect Sri Lanka’s foreign earnings. Between 2015 and 2020, the U.S. made up about one-fourth to over a quarter (on average) of Sri Lanka’s total exports. This heavy reliance on a single market creates a strategic risk. As a result, any policy change in the U.S., like the newly introduced reciprocal tariffs, could have a serious impact on Sri Lanka’s export earnings.

Sri Lanka’s fisheries sector, a critical source of foreign exchange and rural livelihood, is among the industries vulnerable to this shift. The U,S is one of Sri Lanka's key non-regional markets for high-value seafood products such as tuna, shrimp, and other processed fish items. Any escalation in US import tariffs threatens to undermine Sri Lanka’s market access and erode its competitiveness. 

SRI LANKA’S FISHERIES TRADE PERFORMANCE

The fisheries sector remains one of Sri Lanka’s crucial export earners and import dependent sectors. It has shown a mixed performance over the past decade. From 2015 to 2023, the country’s fisheries exports have generally demonstrated an upward trend in both volume and value. Export earnings rose from US$ 181.8 million in 2015 to US$ 302.7 million in 2023 an increase of approximately 66.5%. Notably, the export quantities also increased from 17,461 metric tons in 2015 to 24,503 metric tons in 2023. Sri Lanka exports higher-value fish and seafood products, but a significant volume of low-value products are being imported. In 2015, Sri Lanka imported fisheries products worth USD 226 million. Various disruptions caused imports to drop to USD 82.2 million by 2023. Early 2024 figures already show over USD 49.7 million in imports in just five months.

Table 1. Sri Lanka’s Fishery Trade Performance (2015–2024): Exports, Imports, Trade Balance, and Exchange Rate Trend"s

Source. Ministry of fisheries Aquatic and Ocean Resources  – Sri Lanka

Sri Lanka’s fishery trade balance has shown a remarkable improvement since 2017. The country shifted from consistent deficits in 2015 and 2016 (US$ - 44.2 million and US$ - 57.5 million, respectively) to a trade surplus from 2017 onward. The highest surplus was recorded in 2022, with US$ 231.8 million, followed closely by 2023 at US$ 220.5 million.

SIGNIFICANCE OF THE U.S. MARKET IN SRI LANKA’S FISHERY EXPORTS

The U,S has emerged as one of the most stable and strategically important markets for Sri Lanka’s fish and fishery product exports over the past two decades. Export data from 2008 to 2023 indicates a distinct transition from Europe-centric trade to a focus on the U.S. In 2008, the U.S. accounted for only 6.4% (1,313 MT) of Sri Lanka’s total fishery exports. By 2016, this figure had grown dramatically to 26.8% (4,719 MT), positioning the U.S. as the single largest individual destination for Sri Lankan fisheries by volume. Although the share declined slightly in subsequent years, it stood at 11.0% in 2023 (2,704 MT). The U.S. remains among the top three export destinations, consistently absorbing over 2,000 MT of fish annually since 2015.

The following graph distinctly shows the volume and value significance of the U.S. market in Sri Lanka's fish and fisheries exports. The U.S. contributed about 5% to Sri Lanka’s fish export income in 2008. This share grew significantly, reaching over 30% by 2016. Although a progressive decrease in later years, the U.S. maintained a contribution of over 15% to total fish export revenues through 2023. This stable proportion of export revenue underscores the increased prices and high demand in the U.S. market.

Chart 1. Proportionate Contribution of Fish and Fishery Products Exported to the U.S. (2008–2023)

 

Source: Ministry of fisheries Aquatic and Ocean Resources  – Sri Lanka

The 2023 data provided by FAO,  indicates an export structure in which some species contribute much more to export value compared to their volume. Crabs constitute about 21% of the overall export volume, yet they account for a substantial 27% of the entire export value. Ornamental fish exhibit a pronounced disparity, with merely 8% of the volume accounting for 21% of the total value. This highlights its significance as a premium niche product despite its minimal tonnage. 

Conversely, shrimps account for 29% of the exported volume, the highest among all species, yet contribute merely 15% to the overall export value. Tuna, accounting for 27% by quantity and 25% by value, demonstrates a more balanced profile, reflecting both volume and value robustness.

Chart 2. Species-Wise Contribution to Sri Lanka’s Fishery Exports to the U.S. – 2023 

Source. FishStatJ  – FAO

POSSIBLE SOLUTIONS TO ADDRESS THE U.S. RECIPROCAL TARIFF IMPACT ON SRI LANKA’S FISHERIES EXPORTS

1. Strengthen bilateral negotiations with the U.S. for tariff relief

Sri Lanka should commence targeted diplomatic negotiations to negotiate exemptions or reductions in the reciprocal tariff of 44% that is levied on its fisheries exports. Sri Lanka could advocate for special consideration by referencing the high-value, sustainable nature of its seafood exports. Vietnam and Bangladesh have engaged in diplomacy and trade missions to safeguard their key export sectors (Reuters, 2025), (Refayet Ullah Mirdha, Mohiuddin Alamgir, 2025). Sri Lanka could also advocate for special consideration in this matter through direct negotiations with the United States.

2. Promote value addition and branding in fisheries products

Investing in processing technologies, eco-labeling, and product development (e.g., ready-to-eat seafood, premium packaging) can help Sri Lankan exporters. It will command higher prices even in tariff-affected markets. However, Sri Lanka’s product development and value chain strategies in the fisheries sector remain comparatively weak, with limited investment in innovation, processing technology, and market-oriented product design. Unlike leading fishing nations such as Iceland and Norway where significant resources are allocated to research, value addition, and branding. Sri Lanka has yet to fully capitalize on its rich marine resources through structured product development. 

3. Utilize Sustainability Certifications to Gain Preferential Access.

Many high-tariff markets provide duty-free or lower-tariff access for certified sustainable products. Sri Lanka’s fisheries sector should aim for certifications such as Marine Stewardship Council (MSC) or Fair Trade (FasterCapital, 2025), which can open preferential trade doors and appeal to environmentally conscious U.S. buyers.

References

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Refayet Ullah Mirdha, Mohiuddin Alamgir. (2025, April 6). Bangladesh moves to deal with US tariff shock. The Daily Star. https://www.thedailystar.net/news/bangladesh/news/bangladesh-moves-deal-us-tariff-shock-3864421

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