Trump pointed the finger at a country where the average wage is $11 a day. The crowd laughed

Washington: US President Donald Trump’s new reciprocal tariffs are set to hit some of the world’s poorest nations the hardest, putting their labour-intensive export industries at risk and diminishing one of the US’s biggest economic advantages over rival China.

Cambodia was slapped with Asia’s highest tariff rate of 49 per cent in Trump’s levies announced on Wednesday. Garment manufacturing giant Bangladesh was hit with a 37 per cent rate, while in Myanmar, where a devastating earthquake last week left more than 3000 dead, the US imposed a 45 per cent duty. The southern African nation of Lesotho received a 50 per cent tariff, the highest of any country.

Even Timor-Leste made the list with a 10 per cent tariff. According to the US State Department, Timor-Leste remains one of the least developed countries in Asia and has little direct trade with the United States. The department’s analysis says the tiny nation’s third-largest export is coffee, which generates between $US15 million ($24 million) and $US30 million a year for its economy. “The United States, via USAID, helped establish the coffee industry in Timor-Leste in the 1990s, and today, Starbucks Coffee Company is a major purchaser of Timorese coffee,” it says.

A market at the village of Lospalos in the east of Timor-Leste. Credit: iStock

“Oh, look at Cambodia, 97 per cent,” Trump said at the White House, drawing laughter as he pointed to the levy he claimed the US was subjected to from the South-East Asian nation. “They made a fortune with the United States of America.” Cambodia levies duties on US goods at an average applied rate of 11.7 per cent, according to US data. The average Cambodian earns about $US6.65 ($10.50) a day, according to World Bank data, less than a fifth of the global average.

The trade action may inflict further economic damage on the world’s poorest countries at a time when Trump’s administration has axed thousands of key aid contracts that for decades gave the US a presence across the globe. The impact of the gutted aid effort is already being felt in Myanmar and across Africa, while China is seen swiftly filling the void in places like Cambodia.

“It’s such a disaster,” said Deborah Elms, head of trade policy at the Hinrich Foundation. “Tariffs of nearly 50 per cent overnight will be impossible to manage.”

No joke: US President Donald Trump and US Commerce Secretary Howard Lutnick unveil tariff rates on US trading partners at the White House on Thursday.Credit: AP

Many of those countries had tariff-free access to the US as Least Developed Countries, she said, adding they might turn to markets in Europe, Japan and Australia in lieu of weak demand in places like China.

Rather than a “reciprocal tariff” as Trump claimed, the US calculated the rates based on a formula that divides a country’s trade surplus with America by its total exports, based on data from the US Census Bureau for 2024. In some cases, that number was then divided by two, producing the “discounted” rate.

The method meant Madagascar, one of the world’s poorest countries and the biggest producer of vanilla, was hit with a rate of 47 per cent.

Africa impact

South African Trade Minister Parks Tau told reporters his team didn’t understand how the US assessed that his country charged it tariffs of 60 per cent. Pretoria’s own calculations indicated a rate of 7.6 per cent, but a 30 per cent tariff will now be levied on Africa’s biggest economy in retaliation.

“We are speculating what the US is calculating this on, we assume it could include the trade balance, it could include other considerations, but at this point we’re going to need clarity from the US as to how they arrived at the number,” he said.

In 2023, South Africa had a $US4.2 billion trade surplus with the US, its second-biggest trading partner. Tau said the tariff on neighbouring Lesotho “literally will devastate” the country of 2.3 million people, which relies on exports of diamonds and clothes.

Botswana, which relies almost exclusively on diamond exports, had a 37 per cent tariff slapped on it even as its mines minister was in the US last month promoting sales of the gems in the world’s biggest market for them. Ivory Coast, the world’s biggest cocoa exporter, now has to contend with a 21 per cent tariff.

A warehouse stores sacks of cocoa beans for shipment abroad in San-Pedro, Ivory Coast.Credit: Bloomberg

The move marks an about-face in American trade policy following World War II that promoted economic integration to help developing nations and advance Washington’s interests abroad. In 2000, then-president Bill Clinton pushed through the African Growth and Opportunity Act, which provided eligible sub-Saharan African countries with duty-free access for more than 1800 products.

Former US president George W. Bush expanded it in 2004 and promoted initiatives that would help countries bring products to US consumers. That program is up for renewal, alteration or termination in September.

“African countries are being penalised for having trade surpluses, some of them achieved by pursuing export-driven development policies, as advised by the US,” said Yvonne Mhango, Bloomberg’s Africa economist. “Most African countries export raw materials to America. One of Trump’s arguments for these tariffs is to bring back manufacturing jobs to the US. Slapping high tariffs on Africa is not going to help.”

Most of US-Cambodia total trade of $US13 billion last year comprised manufactured goods like clothing and footwear made in Cambodia and sold to American consumers.Credit: Bloomberg

China influence

For many nations, particularly in Asia, the rise of China disrupted their economic dependence on the US. Many cultivated ties with Beijing to draw badly needed investment and financing for infrastructure. That left many smaller countries feeling pressured to choose sides.

Cambodia, whose two biggest trade partners are China and the US, had already been veering towards Beijing, the country’s largest source of foreign investment. Most of US-Cambodia total trade of $US13 billion last year comprised manufactured goods such as clothing and footwear made in Cambodia and sold to American consumers.

Cambodia’s government spokesman, Pen Bona, said via text message that he couldn’t yet comment on the tariff, and the matter was being reviewed.

In Bangladesh, which is also heavily reliant on the US market for its garment exports, the government said it was looking at ways to lower tariffs to maintain its trade access.

“Bangladesh is reviewing its tariffs on products imported from the United States,” said Shafiqul Alam, press secretary to interim leader Muhammad Yunus. “The National Board of Revenue is identifying options to rationalise tariffs expeditiously.”

Exporters in Sri Lanka, which suffered a sovereign debt default in early 2022 that triggered the worst economic crisis in the country’s post-independence history, meanwhile warned they are unable to absorb the 44 per cent tariff imposed on the island nation. The US is Sri Lanka’s largest market, accounting for 23 per cent of total exports in 2024.

Analysts questioned the fairness of the US tariff calculations, given the over-sized impact it had on the poorest nations.

“In particular, it punishes small developing countries like Cambodia that simply don’t have the capacity to buy much from the US,” wrote Tommy Xie, head of Asia macro research at Oversea-Chinese Banking Corp.

It could also jeopardise funding from the International Monetary Fund for Sri Lanka, Pakistan and Bangladesh as it would make it harder for them to hit the targets set for them in bail-out programs, Ankur Shukla, a Mumbai-based economist for Bloomberg Economics, said in a report.

Asian nations are also wary of a flood of cheaper Chinese goods in their markets as a result of the knock-on effects of higher US duties. China was charged a 34 per cent reciprocal tariff rate – stacked on top of 20 per cent duties Trump already imposed this year.

“China’s attempts to find new markets for goods previously destined to US will have to go somewhere at least in the short term,” said Elms of the Hinrich Foundation. “This is going to set up new tensions with neighbours.”

Bloomberg

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