The escalating global trade conflict, driven by retaliatory tariffs imposed by US President Donald Trump and subsequent countermeasures from other nations, could have “severe” repercussions for developing economies, a senior UN trade official has warned.
Pamela Coke-Hamilton, executive director of the International Trade Centre (ITC), cautioned on Friday that the impact of rising trade barriers could prove even more damaging than reductions in foreign aid.
“This is a very big deal,” she told Reuters. “If tensions between China and the United States persist, trade between the two could plummet by 80%, sending shockwaves across the global economy.”
According to the ITC, global trade could shrink by 3–7%, with global GDP contracting by 0.7%. Developing countries would bear the brunt of the downturn, the agency warned.
In light of this, the UN trade body advised Bangladesh - currently the world’s second-largest exporter of garments—to pivot towards European markets, which still hold growth potential.
Markets remained jittery on Friday after Trump announced a 90-day suspension on tariffs for countries other than China, even as he raised effective tariffs on Chinese goods to as high as 145%.
Beijing responded in kind, hiking tariffs on US imports by up to 125%. The tit-for-tat measures mark a clear escalation into a full-blown trade war between the world’s two largest economies, threatening to destabilise global supply chains.
“Tariffs can be more detrimental than the withdrawal of foreign aid,” Coke-Hamilton warned, adding that developing nations now risk losing the economic gains made in recent years.
Several least developed countries—including Lesotho, Cambodia, Laos, Madagascar, and Myanmar—may attempt to strengthen regional trade links to offset the loss of access to the US market, the ITC noted.
Should the 37% tariff imposed by the US remain in place after Trump’s temporary suspension expires, Bangladesh could lose $3.3 billion in annual exports to the United States by 2029, the ITC projected. Coke-Hamilton reiterated that Europe remains a viable alternative for Bangladesh’s export ambitions.
The joint forecast by the World Trade Organization and the International Trade Centre—based on data preceding Trump’s latest suspension and China’s tariff hike—predicts long-term and profound damage to developing economies if the trade war persists.
