The world’s poorest nations are once again discovering what it means to be peripheral to power. In the latest chapter of 21st-century great-power rivalry, Washington and Beijing have locked horns in an economic slugfest that began with tariffs and has metastasized into a geopolitical confrontation with global consequences. The fight was supposed to be about fairness, intellectual property, and national pride. But in the fog of economic war, it is the least-developed countries (LDCs) that are losing the most— quietly, painfully, and with no clear way out.
This trade war began in 2018 as a calculated manœuvre by the Trump Administration to rectify perceived imbalances in the U.S.-China trade. There were some justifications, like China’s trade practices, ranging from forced technology transfers to outright theft of intellectual property, which merited a robust response. Tariffs, the Administration reasoned, were the simplest way to penalize bad behavior and protect US manufacturing. But what started as a tactical skirmish over soyabeans and solar panels has become an entrenched strategic rivalry, complete with tit-for-tat tariffs, restricted access to critical technologies, and the ideological framing of economic policy as a weapon of national security.
By 2025, tariffs have reached eye-watering levels— up to 145 percent on some Chinese goods, and as high as 84 percent on American exports. Both governments, cloaked in patriotic rhetoric, insist they are protecting national interests. What they are actually doing is recalibrating the terms of global trade in a way that imperils the fragile economies least capable of absorbing shocks.
The global economy doesn’t operate like a chessboard where moves are discrete and predictable. It functions more like an ecosystem, deeply interconnected, often delicately balanced. Disturb one part, and tremours are felt everywhere. The US-China tariff war has delivered exactly that kind of shock. It has disrupted global supply chains, sent shipping costs surging, and created a cascade of uncertainty that disproportionately affects those already on the economic margins.
Least-Developed Countries tend to rely on exports of raw materials, low-cost agricultural goods, and labour-intensive manufactured products such as garments. Their economies are often mono-sectoral, their infrastructure underdeveloped, and their labour markets heavily informal. When global trade slows— as it has, both due to tariffs and persistent post-pandemic disruptions— these nations lose access to the vital lifelines of foreign exchange and employment. Export revenues fall, government budgets constrict, and hard-won progress in poverty reduction risks being undone.
Compounding the pain is the way China has adapted to US tariffs. Facing dwindling access to American consumers, Beijing has turned aggressively into other markets, many of them in the developing world. Chinese goods, often heavily subsidized or state-backed, now flood African, Latin American, and Southeast Asian markets. Local producers in these regions, already operating on razor-thin margins, cannot compete.
Consider the garment industry in Ethiopia, once touted as a model of how low-income countries could industrialize by capturing China’s low-end manufacturing as it moved up the value chain. In recent years, that promise has stalled. Chinese textile firms, seeking tariff-safe havens, are re-exporting through third countries or pricing Ethiopian products out of regional markets altogether. The same story is playing out in Kenyan agriculture, Bangladeshi electronics assembly, and Guatemalan coffee exports.
If we believe in a world order that is open, rules-based, and minimally fair, then it cannot be one where the smallest nations always pay the steepest price. For now, that’s precisely the world we’re living in.
At the same time, the Belt and Road Initiative, China’s globe-spanning infrastructure drive, has tightened its grip on many LDCs. While billed as an engine of development, the BRI too often functions as a lever of influence. The loans are opaque, the projects frequently under-deliver, and the debt burdens can be crushing. Sri Lanka’s loss of the Hambantota Port to Chinese control remains a cautionary tale. Other countries, like Zambia and Laos, face mounting debt-service obligations without commensurate economic gains.
To be fair, the USA hasn’t offered a particularly compelling counter-narrative. Washington’s approach has oscillated between protectionist retrenchment and rhetorical gestures about near-shoring or “friend-shoring” supply chains. Initiatives like the African Growth and Opportunity Act (AGOA) or the BUILD Act, which created a new development finance agency, remain underfunded and underpublicized. Meanwhile, the Biden Administration’s “worker-centred” trade policy often seems more focused on appeasing domestic labour unions than on engaging meaningfully with global economic partners.
Europe, for its part, talks a good game. The EU’s Global Gateway strategy is meant to be a high-standard alternative to the BRI. But aside from some promising energy and digital infrastructure projects, its reach remains modest. The result is a gaping vacuum where a coordinated, values-based economic strategy for the developing world should be.
Some argue that the US-China decoupling presents an opportunity for LDCs. The theory goes like this: as multinationals seek to diversify supply chains away from China— “China-plus-one” being the operative term— countries like Vietnam, Indonesia, and India will benefit. To a limited extent, they have. Vietnam has attracted significant electronics investment. Bangladesh has strengthened its apparel sector. Even Mexico has enjoyed a mini-renaissance in nearshoring.
But these are exceptions, not the rule. Most LDCs lack the infrastructure, policy coherence, or political stability to become viable alternatives. And the industries that are migrating tend to be low-margin and high-risk— exactly the sort of jobs that will be first to vanish as automation and artificial intelligence accelerate. If anything, LDCs are being repositioned not as partners in global trade, but as expendable nodes in a more fractured, regionalized economic system.
So what should be done? For one, economic diversification is no longer a luxury— it is a necessity. Countries like Rwanda, which is cautiously nurturing a digital services sector, or Ghana, investing in agro-processing, point to possible paths forward. But these require investment, not just in capital projects, but in education, governance, and regulatory frameworks.
Second, regional integration must move from aspiration to reality. Africa’s Continental Free Trade Area (AfCFTA) has the potential to boost intra-African trade by more than 50 percent by 2030. That would provide a vital buffer against external shocks. But the barriers— non-tariff restrictions, poor infrastructure, political reluctance— remain formidable.
Third, fiscal responsibility is paramount. The temptation to borrow cheaply and spend extravagantly is understandable, especially when global capital is chasing yield. But vanity projects, white-elephant airports, and ghost cities will do little to build resilience. What LDCs need are power grids, roads, digital access, and basic health infrastructure.
Finally, the major powers must acknowledge the ripple effects of their economic nationalism. If the USA wants to lead the free world, it cannot pursue a trade policy that prioritizes parochial interests over global stability. Trade preferences, capacity-building, and fair market access must be part of the toolkit. And if China wants to be seen as a responsible stakeholder, it must rethink the predatory aspects of its development lending and respect the agency of its partners.
History is unkind to great powers that forget the rest of the world exists. The US-China tariff war may yet produce a winner in some abstract sense of global economic supremacy. But it has already produced real losers— millions of people in countries that had no vote in this conflict, no say in the decisions, and no means of escape from the fallout.
