Higher tariffs can create opportunities for some developing countries: report

Higher tariffs are expected to have significant economic costs but these may also create opportunities for some developing countries as major trading partners realign their supply chains and forge new trade relationships, according to the United Nations flagship report.

The World Economic Situation and Prospects: March 2025 Briefing said a breakdown by product category provides insight into which countries may benefit from supplying substitutes for tariff-affected goods should United States tariffs continue to target bilateral trade deficits.

It said among high-tech products, China remains a major supplier of electronics and machinery to the US, while the European Union remains a key source of pharmaceutical and machinery imports.

Citing earlier study, the UN report said several East Asian economies, such as Malaysia and Singapore, are emerging as specialized component producers in consumer electronics.   

However, outside of East Asia and Mexico, most developing countries lack the industrial capacity and supply chain integration needed to replace major high-tech suppliers, it said.

“By contrast, a realignment of supply chains in more labor-intensive low- and mid-tech industries could create new opportunities for a broader set of developing countries. East Asia is well-positioned to benefit, but other regions could also gain if the United States shifts away from its main trading partners China, Canada, Mexico, and the European Union,” it added.

The report said Vietnam and Indonesia could emerge as alternative suppliers of toys to the United States which remains heavily dependent on China, while other countries have strengthened their market positions in apparel.    

PHILEXPORT News and Features
March 21, 2025
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