World’s Poorest Hit By Double Whammy - Trade War Plus A War On Aid

President Trump has announced his latest tariffs after a 90 day pause, confirming an increase for 14 countries, including some of the poorest.

Today’s announcement includes 40% tariff on goods from Myanmar and Laos, and a 36% tariff on goods from Thailand and Cambodia.

"We are still waiting to see if he will carry through on his threat to increase tariffs on Pacific Island countries," says Josie Pagani, CEO of ChildFund.

In April Trump announced tariffs in the Pacific, with Fiji likely to be charged the most at 32 per cent. Nauru, one of the smallest nations in the world would be hit with a 30 per cent tariff, while Vanuatu would get a 22 per cent tariff.

The US is Fiji's top export destination, with Fijian exports totalling $US360 million in 2023.

Kava represents 70 per cent of Vanuatu exports, and the US is one of its primary export destinations for the local drink.

"If Vanuatu gets lumped with a 22% tariff on top of cuts to US aid, while it is still struggling to recover from last year’s earthquake, it will be a real blow to its economy," says Josie Pagani.

"Being hit with a double whammy - cuts to aid budgets and a trade war - could wreak havoc on the world’s most indebted countries."

Low to middle-income countries’ debt levels have more than doubled since 2009 and the cost of servicing that debt has grown.

"These tariffs make it harder for countries to trade their way out of poverty. It decreases the value of their exports, therefore reducing countries’ access to foreign currencies, which they need to pay back their external debt."

"There is some hope. Some developing countries will find new markets in Europe, Southeast Asia and the Pacific, including New Zealand and Australian markets. There are also other development banks who can lend to poor countries, for example the European Investment Bank and the Asian Infrastructure Investment Bank. The U.S. is not a member of either.

"But there is no doubt that today’s tariff announcement will make it hard for countries to wean themselves off aid by increasing trade. The world is set to become a more dangerous place. The last thing we need now," says Josie Pagani.

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