Globalization under seize

M A Hossain,

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% to 5.8% 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% on Indian goods, 20% on Bangladeshi products, and 20% on Sri Lankan exports. Washington claims these measures 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; it breeds retaliation, disrupts supply chains, and heightens uncertainty. Trump’s tariffs arrive at a fragile time — with the Ukraine war, the U.S.-China rivalry, and a weakened World Trade Organization. For South Asia, this turbulence exposes both 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% to 6.3% by 2026–27. Finance Minister Nirmala Sitharaman maintains that India can absorb shocks, but resilience has limits. Since India contributes more than 75% of South Asia’s GDP, its slowdown will inevitably drag 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 — 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 reviving, 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 ASEAN and the Middle East, and joining partnerships like RCEP 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, political and defense analyst based in Bangladesh. He can be reached at: writetomahossain@gmail.com

This article published at :

1. The Korea Times, S. Korea: 16 Oct,25