By: Marta Bengoa
U.S. president Donald Trump's latest escalation in trade policy — branded as "reciprocal tariffs" — extends his administration's protectionist agenda with particularly severe consequences for developing economies. Building upon previous Section 232 and USMCA-related measures, this latest action applies a systematic formula that heavily penalizes the Global South under the banner of trade reciprocity, despite profound economic disparities between these nations and advanced economies. The announced tariffs establish a baseline 10% duty on all imports starting April 5, followed by higher individualized rates on countries with the largest trade deficits with the United States beginning April 9. For emerging economies like Vietnam, Cambodia, and India, these rates reach staggering levels — 46% for Vietnam, 49% for Cambodia, and 24% for India.
These tariff structures are concerning on multiple levels. First, they fail to account for the fundamental economic development disparities between advanced and developing economies. Nations like Cambodia, with a GDP per capita of approximately $1,700, face tariff rates nearly five times higher than the baseline applied to wealthy nations. This inverts the traditional trade structure that historically provided developing economies preferential access to facilitate their economic growth.
The economic implications are potentially devastating. Vietnam, which has positioned itself as a manufacturing alternative to China, sends 26.7% of its GDP to the U.S. market. With 46% duties on $116.1 billion in exports, Vietnamese manufacturers face approximately $53.4 billion in new tariff costs — equivalent to 12.3% of Vietnam's entire GDP. This represents an existential threat to an economy that has built its development strategy around export manufacturing. Similarly, Cambodia's garment industry confronts nearly 50% tariffs when exports to the United States already represent 19.3% of its GDP. Based on 2023 trade figures, the $5.9 billion in goods Cambodia exports to the United States would face $2.9 billion in tariff costs — a staggering 9.5% of its total economic output. For a country where the garment sector employs over 800,000 workers, predominantly women, these tariffs could trigger widespread factory closures and unemployment.
The most problematic aspect may be the deliberate ambiguity around how countries might negotiate lower rates. The administration indicates modifications are possible if trading partners "take significant steps to remedy non-reciprocal trade arrangements," but offers no concrete criteria. This creates an unpredictable negotiating environment where developing nations must guess what concessions might satisfy U.S. demands.
For global supply chains, these tariffs introduce massive complications. The modern manufacturing ecosystem relies on components crossing multiple borders during production. A single product might incorporate materials from Cambodia, assembly in Vietnam, and packaging in India before reaching U.S. consumers. Rules of origin determinations become extraordinarily complex when each link faces dramatically different tariff rates. This complexity doesn't simply raise prices — it fundamentally disrupts the integrated production networks that have driven global poverty reduction.
What's absent from this approach is any serious engagement with the developmental realities of global trade. The 2023 data reveals stark dependency ratios — Vietnam and Cambodia send over a quarter and a fifth of their economic output to American consumers, respectively. Rather than constructive policy addressing legitimate trade concerns, these tariffs resemble punitive measures against nations still climbing the economic development ladder. For a sustainable global trading system, policy must acknowledge developmental differences rather than penalizing countries for their economic position.
While the administration claims these measures will reshore manufacturing to the United States, historical evidence suggests otherwise. Manufacturing processes will likely relocate to countries with lower tariff exposure rather than return to higher-cost U.S. production. The primary losers will be developing economies that staked their growth strategies on export-oriented manufacturing and U.S. consumers facing higher prices. Based on 2023 trade data, if we apply the proposed tariffs to just the $116.1 billion in Vietnamese imports, $5.9 billion from Cambodia, and $40.5 billion from Brazil, American consumers would face approximately $60.3 billion in additional costs. This contradicts the administration's cited studies claiming "very minor effects on prices." The burden will fall hardest on lower-income Americans who allocate higher percentages of income to imported goods like clothing and electronics from precisely these Global South nations.
Marta Bengoa is a Non-Resident Fellow at ORF America.