Tariff shock: Why poorer countries now face the biggest trade burden

23/05/2025 02:00 AST

A sweeping new wave of import tariffs, led by the United States, is about to reshape global trade - and the world's most vulnerable economies are set to bear the brunt.

A fresh analysis from the United Nations Conference on Trade and Development (UNCTAD) warns that Least Developed Countries (LDCs) and small island nations face a steep rise in trade costs that could crush export hopes and deepen existing inequalities.

In its latest report, "Sparing the Vulnerable: The Cost of New Tariff Burdens," UNCTAD highlights that the global tariff landscape is shifting fast - and not in favour of the developing world.

What's changing - and why it matters now
Starting April 2, 2025, the US imposed a blanket 10% tariff on all imports. But that was only the beginning. Come July, additional country-specific hikes will take effect - raising tariffs for 22 developing nations, including seven of the world's poorest, to over 25%.

These new measures bypass existing trade agreements and override WTO rules, meaning even countries with historically preferential access will pay more.

For smaller, less diversified economies - many of which contribute next to nothing to global trade imbalances - this is a costly blow. UNCTAD estimates that LDC tariffs, which had already doubled in April, could nearly triple by July, surging from 16% to 44%.

Who gets hit hardest?
The biggest price increases are falling on:

Asian and Oceanic developing economies: Tariffs already stand at 13%, with a jump to 24% looming.

Latin America and the Caribbean: Facing a dramatic surge from under 0.5% to over 13%.

Agriculture and textiles sectors: These lifelines for many LDCs are now exposed to the steepest hikes.

Even nations not directly targeted - those without major trade surpluses or political friction with the US - are caught in the crossfire. Their trade costs are climbing sharply, and export margins are getting thinner.

Why this is raising alarm
Despite accounting for just 0.3% of the US trade deficit, many of these countries are now being penalized by broad, one-size-fits-all tariffs. According to UNCTAD, the rising costs could discourage investment, reduce market access, and make it even harder for poor nations to trade their way out of economic hardship.

What's next?
UNCTAD is calling for urgent policy interventions to shield vulnerable economies, including targeted exemptions, better trade facilitation, and support for economic diversification.

Their online data story includes detailed country-level tariff estimates, regional forecasts, and interactive visualizations to help policymakers understand and mitigate the fallout.

As trade tensions escalate, the concern is clear: unless global trade rules protect the smallest players, the biggest losers may be those who can least afford it.

Gulfnews