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US tariffs uncertainty hurts world economy, with poorest countries hit hardest – top UN economist

A new US decision to further delay the end of a 90-day pause on tariffs is bad for business, a top UN economist said on Tuesday.

“This move actually extends the period of uncertainty, undermining long-term investment and business contracts and creating further uncertainty and instability,” said Pamela Coke-Hamilton, head of the International Trade Centre (ITC).

A 90-day pause placed by the US on import tax hikes was set to expire this week, but the pause button will now remain pressed until 1 August.

Ms. Coke-Hamilton stressed that the least developed countries are among those to whom the most aggressive levies would apply.

“Not all countries feel the impact in equal measure,” she said, highlighting that those “with the most to lose” would be hit the hardest, with Lesotho, Lao PDR, Madagascar and Myanmar facing rates “between 40 and 50 per cent”.

While delaying higher tariffs on imports, the US Government has reportedly sent letters to 14 countries detailing the duties their exports would be subjected to starting 1 August.

Ms. Coke-Hamilton highlighted the “real-world consequences” of economic uncertainty on countries and on entire sectors. “If a business is not clear on what costs they're going to be required to pay for exporting or for bringing in certain goods into a particular market, they cannot plan,” she said.

In one of the most striking examples, Lesotho, which sends close to 60 per cent of its apparel exports to the US, is set to face a 50 per cent tariff.

The two major carriers for exports of textiles and apparel from the small southern African nation to the US have withheld their investment, the ITC head explained. “The future of the country’s top industry is in question, and up to tens of thousands of jobs are at risk,” she said.

Ms. Coke-Hamilton further highlighted the combined effects of tariffs and of the global cuts in development aid, “creating a dual shock for developing countries”.

The world’s richest economies, known as the G7, which together account for some three quarters of all official development assistance, are set to slash their aid spending by 28 per cent next year compared to 2024 levels in what would be “the biggest cut in aid since the G7 was established 50 years ago,” she said, quoting Oxfam data.

“In short… a perfect storm is brewing,” she warned.

Asked about consequences for the US economy, the ITC head spoke of “negative impact” in the long run. “I'm not clear on what the long-term plan is… but from my perspective at this point, I don't see a win here in the long term,” she said.

In today’s trade context marked by instability, Ms. Coke-Hamilton pointed to several avenues for growth for developing countries, including investing in stronger regional value chains.

The African Continental Free Trade Area in particular has the potential to “change the terms of trade,” she said. Intra-African trade currently stands at 14 to 16 per cent – the consequences of rising to 40 - 50 per cent would be “transformational”.

Another opportunity can be found in pivoting from commodity dependence to higher-value exports. The ITC head estimated that 43 per cent, or $109 billion, of the export potential of least developed countries in manufacturing in 2029 is currently untapped.

If countries seize such opportunities, the US tariffs may reshape the global trade landscape by “forcing decisions that should have been made a long time ago”: promoting diversification, regional integration and forays into new markets.

For developing countries, these shifts may lead to “promoting an investment in themselves rather than dependence,” the UN trade expert said.

Ms. Coke-Hamilton also highlighted the significance of China’s latest moves on import taxes.

“China has now announced that they are going to give full tariff-free access for Africa,” she said. “That is a major, major, major development and it can swing things in a way that was not anticipated three months ago.”

-Ends-

US tariffs impact - ITC

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