Trump's trade strategy baffles the globe, impacting the poorest the most
U.S. President Donald Trump faced ridicule for implementing trade tariffs on remote islands primarily populated by penguins, but the serious implications of his tariff formula are evident: many of the world’s poorest nations are feeling the...
TroibNews 
U.S. President Donald Trump faced ridicule for implementing trade tariffs on remote islands primarily populated by penguins, but the serious implications of his tariff formula are evident: many of the world’s poorest nations are feeling the brunt of these policies.
The formula is straightforward: divide the U.S. goods trade deficit with a country by that country's exports to the U.S., then express it as a percentage. This percentage is halved to determine the U.S. "reciprocal" tariff, which has a minimum threshold of 10 percent.
As a result, the Australian territory of Heard Island and McDonald Islands, situated near Antarctica, was assigned a 10 percent tariff.
In stark contrast, Madagascar, one of the poorest countries globally with a GDP per capita of just over $500, faces a staggering 47 percent tariff on its $733 million in exports—including vanilla, metals, and apparel—to the U.S. last year.
"Presumably, no one is buying Teslas there," remarked John Denton, head of the International Chamber of Commerce, highlighting Madagascar's struggle to appease Trump by purchasing high-end U.S. products.
Madagascar isn't alone in facing these tariffs. The rigid application of the formula to nations that cannot afford significant imports from the U.S. results in disproportionately high reciprocal tariffs; for example, Lesotho has a 50 percent tariff while Cambodia faces 49 percent.
"The biggest losers are Africa and Southeast Asia," Denton noted, warning that this approach "risks further damaging the development prospects of countries already facing worsening terms of trade."
Southeast Asian nations have been hit especially hard. Vietnam, facing a 46 percent tariff, has called for negotiations with Washington to contest the "unfair" duties, while Thailand's prime minister announced plans to pursue discussions to lower the 37 percent tariff her country faces—significantly higher than the anticipated 11 percent.
"We have to negotiate and get into details," stated Thai Prime Minister Paetongtarn Shinawatra. "We can't let it get to where we miss our GDP target."
Among the nine Southeast Asian countries targeted by Trump, six experienced tariffs that were much higher than expected, ranging from 32 percent to 49 percent. In comparison, the European Union's tariff level was 20 percent, Japan's was 24 percent, and India's was 27 percent.
With major companies like Apple, Nike, and Samsung having substantial manufacturing operations in Vietnam, the country appears particularly vulnerable. Its exports to the United States amounted to $142 billion last year, nearly 30 percent of its gross domestic product.
Following the tariff announcement, Vietnam's benchmark stock index fell by 6.7 percent, marking its steepest one-day drop since January 2021, while its dong currency slipped 0.7 percent to an all-time low.
Vietnam's trade minister, Nguyen Hong Dien, dispatched a diplomatic note to the U.S. on Thursday and expressed a desire to engage with U.S. trade representatives to reevaluate what he called an unfair decision, according to state media.
"Vietnam's export-driven growth model has been highly successful, attracting multinational companies... However, a 46 percent U.S. tariff would directly challenge this model," commented Leif Schneider, head of the international law firm Luther in Vietnam.
Internationale Nederlanden Groep estimates that the tariffs could potentially jeopardize 5.5 percent of Vietnam's gross domestic product.
Additionally, Cambodia, Laos, and Myanmar—marked by conflict and natural disasters—are set to face tariffs of 49 percent, 48 percent, and 44 percent, respectively, making them some of the most disadvantaged members of the Association of Southeast Asian Nations.
In Southern Africa, Lesotho stands to suffer immensely from the 50 percent reciprocal trade tariff, the highest on Trump’s list, raising concerns about the country’s economic stability.
Lesotho, described by Trump in March as a country "nobody has ever heard of," is among the world's poorest, with a GDP exceeding $2 billion. It enjoys a trade surplus with the U.S., primarily from diamond and textile exports—including Levi's jeans. However, its exports to the U.S. amounted to $237 million in 2024, representing over 10 percent of its GDP.
Trade experts assert that the U.S. action signals the demise of the African Growth and Opportunity Act (AGOA), a trade agreement intended to foster African economic development through preferential access to U.S. markets.
"The 50 percent reciprocal tariff introduced by the U.S. government is going to kill the textile and apparel sector in Lesotho," warned Thabo Qhesi, an independent economic analyst based in Maseru.
According to Oxford Economics, the textile sector is Lesotho's largest private employer, encompassing about 40,000 workers and accounting for approximately 90 percent of its manufacturing employment and exports.
"Then you have retailers selling food, and residential property owners renting houses to workers. If factories were to close, the industry would die, and there would be multiplier effects," Qhesi explained. "So Lesotho will be dead, so to say."
In response to the looming threat, Lesotho's trade minister announced plans to assemble a delegation to engage with U.S. officials about the tariffs that could decimate nearly half of the country's exports. Trade Minister Mokhethi Shelile told parliament that they had already reached out to the U.S. embassy “to clarify how and why Lesotho was included in the list of such high reciprocal tariffs.” He further indicated that a high-level delegation would be sent to the United States to "try to maintain the current market dispensation."
Jessica Kline for TROIB News
The formula is straightforward: divide the U.S. goods trade deficit with a country by that country's exports to the U.S., then express it as a percentage. This percentage is halved to determine the U.S. "reciprocal" tariff, which has a minimum threshold of 10 percent.
As a result, the Australian territory of Heard Island and McDonald Islands, situated near Antarctica, was assigned a 10 percent tariff.
In stark contrast, Madagascar, one of the poorest countries globally with a GDP per capita of just over $500, faces a staggering 47 percent tariff on its $733 million in exports—including vanilla, metals, and apparel—to the U.S. last year.
"Presumably, no one is buying Teslas there," remarked John Denton, head of the International Chamber of Commerce, highlighting Madagascar's struggle to appease Trump by purchasing high-end U.S. products.
Madagascar isn't alone in facing these tariffs. The rigid application of the formula to nations that cannot afford significant imports from the U.S. results in disproportionately high reciprocal tariffs; for example, Lesotho has a 50 percent tariff while Cambodia faces 49 percent.
"The biggest losers are Africa and Southeast Asia," Denton noted, warning that this approach "risks further damaging the development prospects of countries already facing worsening terms of trade."
Southeast Asian nations have been hit especially hard. Vietnam, facing a 46 percent tariff, has called for negotiations with Washington to contest the "unfair" duties, while Thailand's prime minister announced plans to pursue discussions to lower the 37 percent tariff her country faces—significantly higher than the anticipated 11 percent.
"We have to negotiate and get into details," stated Thai Prime Minister Paetongtarn Shinawatra. "We can't let it get to where we miss our GDP target."
Among the nine Southeast Asian countries targeted by Trump, six experienced tariffs that were much higher than expected, ranging from 32 percent to 49 percent. In comparison, the European Union's tariff level was 20 percent, Japan's was 24 percent, and India's was 27 percent.
With major companies like Apple, Nike, and Samsung having substantial manufacturing operations in Vietnam, the country appears particularly vulnerable. Its exports to the United States amounted to $142 billion last year, nearly 30 percent of its gross domestic product.
Following the tariff announcement, Vietnam's benchmark stock index fell by 6.7 percent, marking its steepest one-day drop since January 2021, while its dong currency slipped 0.7 percent to an all-time low.
Vietnam's trade minister, Nguyen Hong Dien, dispatched a diplomatic note to the U.S. on Thursday and expressed a desire to engage with U.S. trade representatives to reevaluate what he called an unfair decision, according to state media.
"Vietnam's export-driven growth model has been highly successful, attracting multinational companies... However, a 46 percent U.S. tariff would directly challenge this model," commented Leif Schneider, head of the international law firm Luther in Vietnam.
Internationale Nederlanden Groep estimates that the tariffs could potentially jeopardize 5.5 percent of Vietnam's gross domestic product.
Additionally, Cambodia, Laos, and Myanmar—marked by conflict and natural disasters—are set to face tariffs of 49 percent, 48 percent, and 44 percent, respectively, making them some of the most disadvantaged members of the Association of Southeast Asian Nations.
In Southern Africa, Lesotho stands to suffer immensely from the 50 percent reciprocal trade tariff, the highest on Trump’s list, raising concerns about the country’s economic stability.
Lesotho, described by Trump in March as a country "nobody has ever heard of," is among the world's poorest, with a GDP exceeding $2 billion. It enjoys a trade surplus with the U.S., primarily from diamond and textile exports—including Levi's jeans. However, its exports to the U.S. amounted to $237 million in 2024, representing over 10 percent of its GDP.
Trade experts assert that the U.S. action signals the demise of the African Growth and Opportunity Act (AGOA), a trade agreement intended to foster African economic development through preferential access to U.S. markets.
"The 50 percent reciprocal tariff introduced by the U.S. government is going to kill the textile and apparel sector in Lesotho," warned Thabo Qhesi, an independent economic analyst based in Maseru.
According to Oxford Economics, the textile sector is Lesotho's largest private employer, encompassing about 40,000 workers and accounting for approximately 90 percent of its manufacturing employment and exports.
"Then you have retailers selling food, and residential property owners renting houses to workers. If factories were to close, the industry would die, and there would be multiplier effects," Qhesi explained. "So Lesotho will be dead, so to say."
In response to the looming threat, Lesotho's trade minister announced plans to assemble a delegation to engage with U.S. officials about the tariffs that could decimate nearly half of the country's exports. Trade Minister Mokhethi Shelile told parliament that they had already reached out to the U.S. embassy “to clarify how and why Lesotho was included in the list of such high reciprocal tariffs.” He further indicated that a high-level delegation would be sent to the United States to "try to maintain the current market dispensation."
Jessica Kline for TROIB News
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