Sri Lanka’s Left in the Tariff Trap

Sri Lanka’s new left-wing government has already been tested by tariff shocks and IMF pressure. Either it can radically reform a broken export-led model, or else give up on the promise it offered to working people.

SRI LANKA-COLOMBO-CHINESE CULTURE FESTIVAL

Sri Lankan prime minister Harini Amarasuriya delivers a speech in Colombo, Sri Lanka, on January 19, 2025. (Wu Yue / Xinhua via Getty Images)


“Katunayake FTZ workers skip travel home to vote due to high bus fares” reported a Sri Lankan news outlet on the morning of Monday, May 5, one day before local government elections. The headline captured in just a few words the quiet crisis unfolding in the country’s Free Trade Zones. One young garment worker put it plainly: “We just can’t afford the bus fare to go home and vote. So, we’re staying back in the dormitories.”

Alongside her are hundreds of others — predominantly women — who have made the same choice, not out of political apathy, but due to sheer economic constraint. Their absence at the polls is not just a story of personal hardship. It’s a powerful symbol of how economic vulnerability is now silencing low-income Sri Lankans’ political voice, and how the country’s export-led growth model has reached a breaking point.

Lost in the headlines about great-power trade wars is the real collateral damage: the devastating toll they take on fiscally constrained, export-dependent economies like Sri Lanka, where tariff shocks threaten not just trade flows but the very viability of national economic strategies. Donald Trump’s announcement of the so-called “Liberation Day” tariffs marked a dramatic escalation in global trade tensions. Sri Lanka — heavily reliant on ready-made garment (RMG) exports to the United States — was among the hardest hit, facing an initially proposed 44 percent tariff. This posed a potentially crippling blow to an industry that employs around 15 percent of the country’s industrial workforce, most of them women, and remains a pillar of GDP and export earnings. Although the implementation of this tariff is scheduled for July 9 following a ninety-day pause announced by the Trump administration, this episode has highlighted the fragile dependency of small, export-oriented economies on the unpredictable decisions of distant superpowers. The danger has not disappeared but simply been postponed.

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