May 12, 2026
Who Pays When America Raises Tariffs
When the US restructured its tariff regime, the biggest losers weren't China or the EU. UNCTAD's latest data shows tariffs on least-developed countries rose 18 percent in 2025, and the countries that got hit hardest, Lesotho, Bangladesh, Cambodia, Madagascar, had almost nothing to do with the trade imbalances Washington said it was fixing.
Show Notes
Lesotho received the world's highest US tariff rate — 50 percent — on a trade deficit of roughly $237 million, and when it was cut to 15 percent, the factories stayed closed anyway.
The UNCTAD May 2026 Global Trade Update frames what happened in Maseru as a systemic pattern: LDCs absorbed the steepest tariff hikes in 2025 while their global export share barely moved in 16 years, stuck at 1.1 percent against a UN target of 2 percent. For 88 percent of countries, non-tariff compliance costs now exceed the tariffs themselves. Bangladesh negotiated its rate down from 37 to 20 percent and still logged 113 factory closures and 96,000 job losses in 15 months — front-loaded shipments created an inventory hangover that kept new orders suppressed long after the deal was signed.
- LDCs forfeit roughly 10 percent of G20 exports due to lab and certification gaps, not tariff rates
- Bangladesh's effective US tariff rate stacks to 36.5 percent when existing import duties are added to the negotiated 20 percent
- AGOA's short extension offers Lesotho no stability signal strong enough to restart factory investment
Bangladesh graduates from LDC status in November 2026, a structural repricing moment that compounds its existing US tariff exposure by an estimated $8 billion annually — that transition is the next inflection point to watch.