President Donald Trump’s aggressive trade policy is shaking up the global economic landscape. His administration’s decision to impose steep tariffs — with rates exceeding 20% for countries like Vietnam, India, Thailand, and Bangladesh — is setting the stage for a potential global trade crisis, with the developing world likely to suffer the most.
While the US economy is relatively insulated from the direct impact — with trade accounting for less than 25% of GDP — the situation is starkly different for export-dependent nations. For these countries, tariffs hurt developing countries far more than they inconvenience American consumers.
Why Export-Oriented Economies Are at Risk
Unlike foreign aid, which often comes with strings attached or risks mismanagement, export-led growth has proven to be one of the most reliable engines of poverty reduction and economic transformation. The success of Asian Tigers like South Korea and Taiwan underscores this.
Trade fosters:
- Foreign investment
- Job creation
- Technological advancement
- Sustainable GDP growth
But these gains now face a major setback. As US tariffs raise the cost of goods produced in the developing world, these countries risk losing their competitive edge in global markets. This could lead to:
- Economic slowdown or collapse
- Civil unrest
- Rising unemployment
- Worsening poverty levels
The Irony in Policy Logic
The irony is sharp. The very nations — Sri Lanka, Cambodia, Vietnam — that offer non-China alternatives for US supply chains are being penalized. If the US aims to decouple from China for national security, why tax the backup plans?
Even if these countries try to adapt by cutting their own tariffs to invite more imports — a move economists suggest could boost domestic growth — they’ll still face America’s minimum 10% baseline tariff.
Trade vs. Protectionism: A Reality Check
Historically, protectionist policies in developing countries have delivered mixed results. While some argue tariffs help local industries grow, most evidence suggests that free trade promotes competition and curbs corruption.
Take India: A powerhouse with the potential to become the world’s largest economy — but only if it reduces trade barriers. The lesson is clear: Open markets create growth.
Global Consequences of a Trade War
Should these tariff policies spark a global trade war, the consequences could be dire. The dramatic fall in global poverty — one of the greatest achievements of the modern economic era — could be reversed.
And the outcome for the US? No boom in domestic manufacturing, no new wave of low-skill jobs, and minimal long-term economic benefit.
Conclusion
The message is clear: Tariffs hurt developing countries disproportionately. If the US wants a stable global economy and healthy geopolitical alliances, its trade policies must support — not sabotage — export-driven growth in the Global South.
