On April 2, after multiple delays and reconsiderations, the Trump administration declared sweeping “reciprocal” tariffs on nearly 60 nations across the world, declaring it “Liberation Day” in the process. Since that day, both the stock market and the world economy have entered a phase of volatility and uncertainty, with the U.S. market experiencing early signs of a crash (although it is showing signs of recovery), and the U.S. has entered a significant trade war with China as each nation imposes stronger and strong trade barriers on the other. While many tariffs have been on pause for 90 days, there is no indication such a pause will be extended once the time is up, as many nations around the world brace for the economic implications when the tariffs finally do come to fruition.
Since April 2, news has been full of articles highlighting the threats such tariffs will have on prices for U.S. consumers, the trade war on China and the reactions of Mexico, Canada, and even the European Union (EU). What hasn’t been mentioned nearly as much however, is that 11 of the 57 countries tariffed are considered Economic Least Developed Countries (ELDCs), and many others nearly fit the criteria. Many of these countries have received incredibly high tariffs (due to an economically unconventional model of calculation), including Cambodia, Madagascar, and tiny state Lesotho (All LDCs) receiving among the highest tariffs, of 49, 47 and 50 percent respectively. As the tariffs set in and the effects begin to be felt, it is important to to hold the administration accountable on its possible detrimental effect on developing economies across the world due to its tariffs, and much more light must be shed on how this will occur.
As the administration has rolled out tariffs, the aim has clearly been to target countries in which the U.S. has a trade deficit with – essentially countries where the U.S. buys more than it sells to – no matter how big or small the deficit may be. A good example is Madagascar, which exports most notably vanilla, to the United States and most of the rest of the world. Clearly, the U.S. buys a lot of vanilla, but Madagascar probably doesn’t buy nearly as much American-made goods (the U.S. also outsources lots of its industry, so this is a common theme), and they’ve now been hit with a 47 percent tariff not only on vanilla, but all goods. For Madagascar, a nation generally considered to still have a developing economy, a nearly 50 percent tariff on its main source of export revenue is detrimental to their economy. Since the tariff, reports show nearly 60,000 jobs are now at risk in the country if and when the tariffs finally take effect. While there have been many discussions around how this affects U.S. consumers – indeed, the price of vanilla may rise and the use of synthetic vanilla will too – a conversation must be had about how such sudden and harsh trade policies may affect large portions of the developing world, which make up most of the world population as a whole.
It’s important to note that tariffs on nations like Madagascar and others (that both fit the LDC criteria or are still growing economically) rarely help the United States on the same scale that they affect the countries tariffed. Malawi for example, contributes 0.001 percent to the U.S.’ current trade deficit, yet they were hit with an 18 percent tariff. Madagascar contributes just 0.054 percent to the deficit as well. These tariffs are disproportionately hurting developing nations. Not only does it cause many nations to lose revenue from lucrative exports (of which they may not have many), job loss, uncertainty and competition may exacerbate poverty, hunger, and other infrastructure issues leading to halting development even to a halt, putting many lives at risk across the world.
As we wait for the 90 days to slowly wane, the looming threat of economic hardship for many countries in need of economic leniency and help for the sake of their people must be highlighted. The U.S., as long as it continues to be the main economic force of the planet, must understand its effect on the rest of the world and its population. So as you may read the news, and see many articles about how the tariffs affect you, make sure you search out how the tariffs affect the rest of the world. Understanding how the U.S. affects the world is something each of us should be able to do, in order to cultivate a more healthy and growing world.
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