From the South Atlantic Islands to the heart of Asia Southeast, a group of countries and territories as disparate such as Lesoto, San Pedro and Miquelón, Syria, Iraq, Madagascar, Burma, Sri Lanka, Laos, Cambodia, Vietnam and Las Malvinas is the most affected by the imposition of “reciprocal tariffs” announced on Wednesday by President Donald Trump.
The measure, which will enter into force on April 9, will hit economies already marked by a fragile structure, dependent on natural resources, with scarce productive diversification, high labor informality and modest per capita income.
With limited infrastructure and strong exposure to political crises, conflicts or geographical isolation, these countries and territories concentrate their exports in primary sectors such as agriculture, fishing, mining or textiles, which now face new obstacles to enter the US market.
In almost all cases, exports are dominated by basic products without greater added value. Madagascar is the world leader in vanilla production, while Burma and Cambodia depend strongly on the textile sector. Lesoto, completely surrounded by South Africa, exports mainly clothing and diamonds.
San Pedro and Miquelón and Las Malvinas base a good part of their economy on fishing, just like Sri Lanka in tea and rubber. Iraq and Syria, with oil capabilities decreased by conflicts, continue to have their main source of currencies in hydrocarbons. The application of tariffs to these primary products could abruptly reduce export income and discourage foreign investment.
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To this is added a low or medium per capita income that limits the capacity of these countries and territories to absorb external economic impacts. Although Vietnam and Sri Lanka have registered advances towards emerging economies, most continue to face high levels of structural poverty, especially in rural areas.
In fact, in countries such as Laos, Cambodia or Madagascar, a good part of the active population depends on informal or subsistence jobs, without robust social protection networks.
High labor informality and low productivity make these countries even more vulnerable to restrictive commercial measures. In most cases, local productive chains are scarcely technified, with little innovation or access to financing.
A rise in tariffs can be a direct loss of jobs, especially in intensive manufacturing sectors in labor, such as textiles and footwear.
Another common factor is poor or limited infrastructure. Several of these countries lack direct access to the sea – such as Lesoto or Laos – or depend on rivers or river ports to transport their products.
Even in the cases of islands or island territories, such as the Malvinas or San Pedro and Miquelón, commercial logistics is expensive and sensitive to any variation of prices or customs barriers. This limits its competitiveness against economies more integrated in the large global trade corridors.
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Most of these countries also drag a recent history of political instability, armed conflicts or diplomatic isolation. Syria, Iraq and Burma (Myanmar) have been marked by international wars and sanctions, while Sri Lanka and Cambodia face recurrent institutional crises.
This political vulnerability reduces negotiation capacity to protectionist measures and hinders the coordinated response against new commercial barriers.
Finally, the little degree of industrialization or lack of economic diversification make these nations depend on one or two key products. This concentration increases its exposure to the sway of international prices and, now, to the imposition of unilateral taxes such as those announced by Trump.
Only Vietnam has managed to travel to a more complex model, with exports of electronic products and light manufactures, although its maneuvering margin could also be affected if the new rates impact its regional value chain.
In parallel, many of these countries and territories depend on preferential agreements with regional powers or blocks.
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Las Malvinas and San Pedro and Miquelón are integrated into the commercial networks of the United Kingdom and France, respectively; Lesoto benefits from the AGUA agreement (Growth and Opportunities Law for Africa) with EU; and Vietnam, Cambodia, Laos or Sri Lanka keep treated with China, ASEAN (Association of Nations of Southeast Asia) or the European Union.
However, Washington has made it clear that no multilateral commercial agreement will exempt these countries of the new tariff framework, designed – according to the White House – to restore a “fair treatment” in international trade.
With EFE information
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