Globalization under seize
The World Bank’s latest forecast sounds an alarm that South Asia — once the post-pandemic symbol of resilience — is now slowing down. Growth is expected to decline from 6.4 percent to 5.8 percent by 2026, largely due to the resurgence of U.S. trade nationalism under President Donald Trump and his sweeping new tariffs.
The U.S. has slapped heavy duties on South Asian exports: 50 percent on Indian goods, 20 percent on Bangladeshi products and 20 percent on Sri Lankan exports. Washington claims these measures are to punish trade with Russia and offset trade surpluses, but the real effect is far broader, hurting developing economies more than their intended targets.
This isn’t new. The Smoot-Hawley Tariff Act of 1930, designed to “protect” U.S. industry, led to a global trade collapse and deepened the Great Depression. History, it seems, is repeating itself.
In today’s interconnected world, protectionism rarely achieves stability. Instead it breeds retaliation, disrupts supply chains and heightens uncertainty. Trump’s tariffs arrive at a fragile time, in light of the Ukraine war, the U.S.-China rivalry and a weakened World Trade Organization. For South Asia, this turbulence exposes both its economic dependence and strategic vulnerability.
India remains South Asia’s anchor, projected to stay the world’s fastest-growing major economy. Yet its trajectory now faces friction. Tariffs on automobiles, electronics and pharmaceuticals — sectors vital to India’s rise — could shave growth from 6.5 percent to 6.3 percent by 2027. Finance Minister Nirmala Sitharaman claims that India can absorb these shocks, but resilience has limits. Since India contributes more than 75 percent of South Asia’s GDP, its slowdown will inevitably drag down the region’s smaller economies.
Bangladesh, hailed for export-driven growth and social transformation, now faces its biggest test. The U.S. tariffs threaten its largest market, putting millions of jobs at risk. The World Bank warns that without modernized logistics and supply chains, Bangladesh may lose competitiveness. To survive, Dhaka must diversify into higher-value industries like electronics, pharmaceuticals and leather goods, while expanding trade with East Asia and Africa.
Still reeling from its 2022 financial crisis, Sri Lanka now faces rising import costs and reduced export margins. With IMF support and tourism barely helping, new tariffs could destabilize Colombo’s fragile recovery.
Protectionism compounds a larger global malaise: Inflation, inequality, and fragmented labor markets are eroding faith in globalization. For ordinary South Asians, this means higher food prices, fewer jobs and waning purchasing power. The region’s youthful workforce — once an economic asset — risks becoming a burden if growth stalls.
To endure, South Asia must reduce dependence on the U.S. market. Strengthening regional trade, deepening ties with the Association of Southeast Asian Nations and the Middle East, and joining partnerships like the Regional Comprehensive Economic Partnership could provide a lifeline. These are not just economic maneuvers but acts of strategic self-preservation in a world where globalization’s promises are fading.
If Washington continues to weaponize tariffs, 2026 could mark the end of the belief that free trade benefits all and the beginning of an era where power, not principle, shapes prosperity.
M. A. Hossain (writetomahossain@gmail.com) political and defense analyst based in Bangladesh.