by Asad Mirza
The strategy, cloaked in ecological concern, was in truth a vast outsourcing drive that fuelled China’s meteoric industrial ascent.
The wave of tariffs announced by the United States against nearly every major economy has begun to exact its toll. With retaliatory measures led by China, the already fraught situation has become increasingly complex, blurring the very notion of what these tariffs and counter-tariffs entail. Economists have begun to unpack the long-term ramifications of Washington’s decisions, warning of profound consequences for the global economy.
On Friday, 11 April, the UN Secretary General, António Guterres, cautioned that “nobody wins in a trade war,” according to his spokesperson. He voiced particular concern for the world’s most vulnerable countries, those least prepared to weather the economic turbulence. Guterres noted that a global trade conflict would undermine the UN’s Sustainable Development Goals, affecting international progress on poverty, health, and equality.
In defiance of widespread opposition, President Donald Trump signed an executive order on Wednesday, 9 April, enacting so-called “reciprocal tariffs.” The order imposed a minimum baseline tariff of 10 per cent, with higher rates targeting specific trade partners. These sweeping measures, coupled with expected retaliations, could result in what some experts describe as a catastrophe for developing nations.
Pamela Coke-Hamilton, Executive Director of the International Trade Centre, expressed grave concerns about the fallout. Speaking to Reuters, she warned that escalating tensions between the United States and China could reduce trade between the two countries by as much as 80 per cent. “The ripple effect of that across the board can be catastrophic,” she said. The ITC estimates that global trade could contract by 3 to 7 per cent, with global GDP shrinking by 0.7 per cent—disproportionately impacting developing economies.
As China continues to match each US tariff increase with retaliatory hikes of its own, fears are mounting that Beijing could raise tariffs from the current 84 per cent to as high as 125 per cent. According to Coke-Hamilton, such moves could prove more damaging to the developing world than the loss of foreign aid, potentially reversing economic gains achieved in recent years.
In a statement published by the “Financial Times”, the UN Conference on Trade and Development (UNCTAD) echoed these concerns, warning that US-imposed tariffs threaten the integrity of the global trade system. The organisation stated that this new phase jeopardises not only growth and investment but also the developmental strides made by the most fragile economies.
Rebeca Grynspan, UNCTAD’s Secretary-General, called upon the United States to exempt the poorest nations from these aggressive trade measures. Speaking to the “Financial Times”, she argued that such tariffs would inflict disproportionate damage on vulnerable economies while yielding minimal benefit to the US Treasury or its trade deficit. Many of these least developed nations depend on exports to the United States, but their total trade volumes are too modest to influence the broader US trade balance.
Paradoxically, the tariff wave unleashed by President Trump was ostensibly aimed at nations with which the United States holds a significant trade imbalance. Yet its consequences extend far beyond these targets, ensnaring the least developed countries—those that rely heavily on imports from the US and elsewhere—for whom the fallout may prove especially severe.
Illustrating this point, Rebeca Grynspan cited Madagascar as a striking example. With a GDP per capita of merely $509, Madagascar ranks among the world’s poorest nations. “If you try to calculate how much of the US trade deficit it represents, you will get zero, because you cannot even round it up to 0.1 per cent,” she remarked. The country exports goods that the United States does not produce, and thus poses no competition—yet it faces a punitive tariff of 47 per cent.
The Trump administration’s method of calculating so-called “reciprocal tariffs”—proportional to the bilateral trade deficit divided by bilateral imports—effectively penalises the world’s poorest nations, while offering negligible benefit to the US itself. “Our plea, our petition, is to reconsider,” Grynspan said. “It is not that we are questioning what they are doing, it is that [the measures on poorer countries] do not have an impact on the objectives which the US has set out for its trade policy.”
According to her, the 44 least developed countries contribute just 1.6 per cent to the US trade deficit. Nonetheless, the imposition of steep tariffs on them would have “extremely serious” repercussions for their already fragile economies, heightening the risk of renewed debt crises. These dangers would be exacerbated if global interest rates rose and borrowing costs increased in a bid to contain inflation.
Grynspan observed that these poorer nations possess little leverage to demand a rethink from the Trump administration. “They have no negotiating power,” she said, noting they would inevitably find themselves behind stronger, better-connected nations in Washington’s diplomatic queue.
She also warned of a broader decline in global investment, triggered by the uncertainty these tariffs generate. In the longer term, developing economies might be compelled to deepen trade ties with one another, a trend already taking shape. According to UNCTAD data, trade among developing nations now accounts for 30 per cent of total global trade, a share that has grown as trade between wealthy countries has declined by half since the last century.
A Costa Rican economist and former vice-president, Grynspan advocates what she terms “open regionalism”—the emergence of trade blocs such as ASEAN, which help member states build economic resilience and achieve scale, enabling them to compete globally rather than retreat into protectionism.
Looking ahead, she predicted a marked increase in intra-Asian trade and stressed the importance of regional integration for Africa. “The countries of the South need trade,” she said.
Ultimately, the tariff-driven agenda emanating from Washington has cast a dark shadow over the global economy. As world leaders have noted, it is the poorest and most vulnerable nations that will suffer most.
Ironically, it was the West that invigorated the Chinese economy in the final quarter of the last century, channelling the production of nearly every imaginable good to China under the pretext of safeguarding their own environments. The strategy, cloaked in ecological concern, was in truth a vast outsourcing drive that fuelled China’s meteoric industrial ascent.
Yet the West failed to protect the environment even then, hindered by its relentless consumerism and insatiable appetite for consumption. Now, as governments continue to push the deadline for achieving a Net Zero world further into the future, the contradictions of that era linger. Adding to this unresolved legacy is the current wave of tariff-driven economic nationalism—a fresh strain on a global economy still struggling to recover from the upheaval of the Covid-19 pandemic.
(Asad Mirza is a New Delhi-based senior commentator on national, international, defence and strategic affairs, environmental issues, an interfaith practitioner, and a media consultant.)
