Impact of US Tariffs on Developing Countries & Shifting Geopolitical Alliances

CGTN Europe

CGTN Europe spoke to Khalid Nadvi, a political economist and Professor of International Development at the University of Manchester.

Transcript

00:00Khaled Nadvi is Professor of International Development at the University of Manchester.

00:05Well, if these tariffs go through as they were proposed on the so-called Liberation Day,

00:11then those countries are going to be very seriously affected,

00:14particularly small countries like Lesotho, Madagascar, Cambodia.

00:19These are countries that have basically developed their industrial development strategy

00:25around building up the clothing industry, which is largely focused on exporting to the United States.

00:32They have very little options other than exporting to the U.S.

00:38They could try and shift production and exports to other countries,

00:42but most of the firms that are located in those countries that are manufacturing clothing

00:47are geared to the U.S. markets.

00:49So if those tariffs remain at the level that was originally proposed by President Trump,

00:57then you're going to see massive job losses and a very severe impact on those countries.

01:03The other thing to note is that those countries are very heavily dependent on the U.S.

01:07as their main export markets.

01:09So they don't have very many options of going elsewhere.

01:13So you mentioned the clothing industry in particular there.

01:16Are there opportunities, though, for perhaps other countries in different industries

01:20that might now be able to refocus their priorities when it comes to exports

01:23and think about partnerships either regionally or with other countries like China, for example?

01:29You know, if you look at a country that's not too far away from Lesotho, Eswatini.

01:34Eswatini used to have the U.S. as its main export market.

01:38But some years ago, it began to switch over to supplying the South African market in clothing.

01:44And it's now wholly geared to that.

01:47So there are the opportunities for regional value chains to emerge, for regional exports to grow.

01:52But it takes time.

01:54The other option is, as you said, China is an important end market in itself.

01:59So many countries have been exporting raw commodities to China.

02:04And I think the interesting thing will be as this tariff process rolls out

02:10and as the U.S. becomes less reliable in market,

02:14is whether some of these countries start seeing China as a real option.

02:19And to what extent the Chinese government opens up their markets

02:23to low-income developing country exports.

02:27So we may well see us change then perhaps in the business arena.

02:31But what about the geopolitical arena?

02:32Will we see a new kind of coalescence perhaps of the Global South?

02:37I mean, that's already been happening for some time now.

02:39You know, if you look at the trade data,

02:42the Global South is largely trading with other countries in the Global South.

02:46And that's been happening for at least a decade.

02:50And it's not just in raw commodities, it's in finished goods.

02:53You're also seeing the emergence of a whole range of institutions in the Global South around the BRICS in particular,

03:02but also the Asian investment bank, infrastructure and investment bank that's been set up in Beijing.

03:08So you will see new forms of regional and bilateral configurations emerging in terms of geopolitics.

03:20China has also been building a whole raft of bilateral trade agreements,

03:24free trade agreements in the region, in the developing world, both in Southeast Asia,

03:30but also in sub-Saharan Africa.

03:33And you have the Belt and Road Initiative.

03:35So there's been a whole range of new, what you might see as geopolitical alignments taking place.

03:42The other thing that's very interesting in this regard is that the U.S. seems to be pulling out of Africa.

03:49So, I mean, if you see the recent reporting about the State Department potentially or likely to cut down its presence in sub-Saharan Africa,

03:59for most sub-Saharan African countries, their main trading partner is not the U.S.

04:05It's not the European Union.

04:06It is China.

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