United States President Donald Trump has announced that any country continuing to do business with Iran will face a 25 per cent tariff on all trade conducted with the United States, a move that could have serious repercussions for Sri Lanka’s fragile export-dependent economy.
The announcement was made via Trump’s Truth Social account on Monday, as Iran intensified a violent crackdown on anti-government protests, with thousands feared dead.
“Effective immediately, any country doing business with the Islamic Republic of Iran will pay a tariff of 25% on any and all business being done with the United States of America. This order is final and conclusive. Thank you for your attention to this matter!”
"Effective immediately, any Country doing business with the Islamic Republic of Iran will pay a Tariff of 25% on any and all business being done with the United States of America. This Order is final and conclusive...." - PRESIDENT DONALD J. TRUMP pic.twitter.com/UQ1ylPezs9
— The White House (@WhiteHouse) January 12, 2026
The US president did not provide further details on how the tariff would be implemented or whether exemptions would apply. Trump has previously used tariff threats as a tool to exert political and economic pressure on foreign governments.
The warning has raised alarm in Sri Lanka, which maintains trade ties with Iran, particularly in the tea sector. Iran is one of the ten largest buyers of Sri Lankan tea, importing approximately 9,800 metric tonnes every month. At the same time, the United States remains Sri Lanka’s single largest export market, accounting for around 25 per cent of total exports and generating roughly US$3 billion in export revenue annually.
As a trading partner of Iran, Sri Lanka now faces the risk that its exports to the United States could be subjected to an additional 25 per cent tariff. Such a move would significantly increase the cost of Sri Lankan goods for American consumers, potentially suppressing demand and placing further strain on local export industries.
This threat comes on top of an existing 20 per cent tariff that was negotiated between Sri Lanka and the United States following Trump’s tariff shock in April 2025. Together, the measures would represent a substantial double blow to Sri Lanka’s already precarious recovery from economic collapse.
The latest announcement and undermines Sri Lanka’s prospects for economic stabilisation, particularly as the island remains heavily dependent on exports for foreign exchange earnings.
Iran itself trades with more than 100 countries worldwide. China is Iran’s largest export partner, purchasing more than US$14 billion worth of goods in the year to October 2025, according to Trade Data Monitor figures based on statistics from the Islamic Republic of Iran Customs Administration. Iraq follows with imports valued at US$10.5 billion, while the United Arab Emirates and Turkey are also among Iran’s top customers. Exports from Iran to Turkey rose sharply from US$4.7 billion in 2024 to US$7.3 billion last year.
Iran’s exports are dominated by fuel products, reflecting its position as one of the world’s largest oil producers.
With Sri Lanka caught between its economic reliance on US markets and its trade relationship with Iran, Trump’s latest tariff ultimatum adds fresh uncertainty to an economy already under severe strain.