Tariff Disruptions – The Impact on Least Developed Countries (LDCs)
The United Nations Conference on Trade and Development (UNCTAD) has issued a warning about the escalating global tariff disruptions and their increasing impact on the world’s most vulnerable economies—the least developed countries (LDCs). Despite international efforts to double LDCs’ share of global exports, progress remains off track. Instead of moving closer to the 2% target, LDCs’ share has stagnated around 1% for over a decade. Recent shifts in U.S. trade policy have compounded this challenge, with tariffs on LDC exports to the American market tripling in 2025, reaching levels twice as high as those applied to developed countries.
The End of Preferential Market Access
The end of the African Growth and Opportunity Act (AGOA) and HOPE/HELP trade preference schemes for Haiti on 30 September 2025 has created significant setbacks for many LDCs. These initiatives previously provided duty-free access to the U.S. market for a range of manufactured goods, especially textiles and apparel. Their expiry now exposes LDC exports to new, higher tariffs ranging between 10% and 41%, depending on the product and country of origin.
UNCTAD notes that this development threatens key industries that form the backbone of job creation in LDCs—particularly light manufacturing, textiles, and apparel, which employ over 11 million people, more than half of whom are women. The erosion of preferential access removes a vital competitive edge for LDC exporters, increasing production costs, reducing export volumes, and risking factory closures and job losses.
LDCs Bear the Brunt of Rising Tariffs
According to UNCTAD, the U.S. market accounts for nearly 10% of total LDC exports. The new tariffs will therefore have a direct and measurable impact on economic performance and trade revenues. While developed countries now face average tariffs of around 14%, LDCs are subject to rates exceeding 28%—a burden that drastically reduces their ability to compete globally.
The report highlights stark variations among countries. Some, such as Bangladesh, Cambodia, and the Lao People’s Democratic Republic, face tariff increases exceeding 20–36 percentage points. Others in Africa, including Tanzania, Uganda, Rwanda, and Senegal, also face steep hikes of 9–20 percentage points. These surges threaten the fragile progress achieved through decades of trade reforms, investment in export sectors, and participation in global value chains.
Structural Vulnerabilities and Gendered Impacts
The tariff disruptions are more than an economic issue—they have deep social and developmental implications. The textile and apparel sectors, heavily affected by the new U.S. measures, are among the largest sources of female employment in LDCs. Over 53% of workers in these industries are women, many of whom rely on factory wages as their primary source of income and economic empowerment.
Rising tariffs could trigger widespread job losses, worsening poverty and inequality, and reversing gains in gender equality. This also threatens broader development goals, including those under the Istanbul Programme of Action and Sustainable Development Goal 17.11, which aims to double LDCs’ share of world trade by 2030.
Implications for Graduating and Transitioning LDCs
UNCTAD draws attention to the specific risks faced by graduating LDCs—countries transitioning from LDC status to middle-income economies. Many of these, such as Bangladesh, Nepal, and Lao PDR, rely heavily on preferential trade access to maintain export competitiveness. Graduation without adequate support mechanisms exposes them to sudden tariff increases and market losses, threatening the sustainability of their economic transition.
Asian LDCs dominate the list of countries experiencing the steepest tariff surges. Bangladesh and Cambodia, both major apparel exporters, face hikes of around 20 percentage points, while Lao PDR faces the highest increase at 36 percentage points. African countries, though less exposed in aggregate export volume, are also vulnerable due to their dependence on a few key export sectors and limited diversification.
Regional and Global Dimensions
The UNCTAD brief shows that while the U.S. remains an important trading partner, there is significant potential for diversification within the Global South. Currently, China accounts for over 21% of LDC exports, followed by the European Union (18.8%), India (6%), and the United Arab Emirates (7.7%). This emerging multipolar trade environment offers opportunities for LDCs to deepen South-South cooperation, reduce dependence on any single market, and enhance resilience against external policy shocks.
However, diversification requires deliberate policy actions—investments in productive capacities, value addition, logistics, and trade facilitation. Regional frameworks such as the African Continental Free Trade Area (AfCFTA) provide a promising platform for LDCs to strengthen intra-African trade and build regional value chains that can substitute for lost external preferences.
Policy Priorities and the Way Forward
UNCTAD underscores that structural transformation remains the cornerstone of LDC development. Building robust productive capacities, upgrading manufacturing, and diversifying export bases are essential to withstand future tariff disruptions. Furthermore, the report calls for renewed global commitment to special and differential treatment for LDCs under the multilateral trading system.
Reforms in global trade governance should recognize LDC vulnerabilities and ensure that market access benefits are preserved even as countries graduate from LDC status. This would safeguard progress towards inclusive growth and the Sustainable Development Goals.
Ultimately, UNCTAD’s message is clear: the recent tariff disruptions are not just temporary trade measures—they are a wake-up call to rethink the foundations of global trade equity. For LDCs, the path forward lies in regional integration, industrial diversification, and resilience building. For the international community, it is a reminder of the shared responsibility to ensure that trade remains a driver of sustainable and inclusive development, not a barrier to it.