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In ongoing trade negotiations, the United States has urged Sri Lanka to permit duty-free access for American-manufactured vehicles, including electric vehicles (EVs), in an effort to reduce the growing trade imbalance between the two nations. A source close to the matter revealed that while Sri Lanka did not give immediate approval, it expressed willingness to consider the proposal gradually over time.
These discussions are part of continued trade dialogues aimed at adjusting tariffs to be more favorable. Notably, Sri Lanka successfully negotiated a tariff reduction from a proposed 44% down to 20%, aligning itself with regional competitors like Vietnam and Bangladesh, which also maintain a 20% tariff on similar goods.
In 2024, trade between the U.S. and Sri Lanka was valued at approximately $3.4 billion. U.S. exports to Sri Lanka rose to $368.2 million—a 4.9% increase from 2023—while imports from Sri Lanka reached $3.0 billion, up by 6.1%. This resulted in a trade deficit of $2.6 billion for the U.S., marking a 6.3% increase from the previous year.
As part of Sri Lanka’s strategy to bridge the trade gap, the government has offered to purchase crude oil from U.S. suppliers if prices remain competitive. The Ceylon Petroleum Corporation (CPC) has already requested samples of West Texas Crude (WTC) for quality assessment.
Meanwhile, apparel remains Sri Lanka’s largest export to the U.S. market. The Sri Lankan government firmly opposed U.S. suggestions to restrict the import of Chinese raw materials for its garment industry, emphasizing the importance of supply chain independence.
With both China and the U.S. being global leaders in electric vehicle production—and Sri Lanka already importing Chinese EVs like BYD—the country must tread carefully in managing international relationships while fostering economic development.
