Mato just raised pre-seed Read more

Book a demo

Who Pays When America Raises Tariffs

  • May 12, 2026
  • 24 min

Show notes

What the episode covers

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.

Timeline

In this episode

8 moments worth skipping to. The timecodes match the player above.

  1. 0:15Introduction
  2. 2:34Lesotho Makes Jeans for Wrangler. Now Its Factories Are Empty.
  3. 5:55The Numbers UNCTAD Published That Nobody Led With
  4. 9:16Bangladesh Got a Deal. But the Damage Was Already Done.
  5. 12:28The Tariff Is Just the Headline. The Red Tape Is the Story.
  6. 15:46Cambodia's Choice and the South-South Pivot
  7. 18:56What to Watch: Bangladesh Graduates, Lesotho Waits, and the SDG Nobody Will Hit
  8. 22:15Outro

Quick answers

Straight from the episode

The questions this one settles, without the listen.

Why did Lesotho's textile factories close even after the US reduced its tariff rate?
Even after the US tariff on Lesotho dropped from 50 percent to 15 percent, the reduction was not enough. Competing countries like Kenya face only a 10 percent tariff, leaving Lesotho uncompetitive on price. The short AGOA extension also failed to restore investor confidence, so factory closures and mass job losses continued.
How many jobs did Bangladesh's garment sector lose due to US tariffs?
Between January 2024 and March 2025, Bangladesh's garment sector saw 113 factory closures and roughly 96,000 job losses. A front-loading trap made things worse: rushed shipments created a US inventory overhang that suppressed new orders even after the tariff rate was reduced, and the effective rate after stacking existing import duties on the negotiated 20 percent deal still reached 36.5 percent.
What are non-tariff measures and why do they hit least developed countries hardest?
Non-tariff measures are regulatory compliance requirements such as product testing, labeling, and certification standards. According to UNCTAD's May 2026 Invisible Barriers report, they now cost more than tariffs for 88 percent of countries. LDCs are hit hardest because they lack local labs and legal capacity, forcing factories to ship products to third countries just to obtain a compliance certificate. LDCs forfeit around 10 percent of G20 exports as a result. Better transparency alone could cut those costs by 19 percent, and standard alignment within Africa by 30 to 40 percent.
What is Bangladesh's LDC graduation and why does it matter for its export sector?
Bangladesh is scheduled to graduate from least developed country status in November 2026. That graduation would strip it of the preferential trade terms tied to LDC status, potentially adding up to 8 billion dollars in annual export losses on top of the US tariff hit it is already absorbing. The episode frames this as a double exposure that puts the country's garment-dependent economy under severe pressure.
Have least developed countries met the UN SDG target on export share?
No. The UN SDG target called for LDCs to reach a 2 percent share of global exports. UNCTAD data cited in the episode puts LDC export share at 1.1 percent in 2024, barely above the 1 percent level recorded in 2010. The episode notes that no G20 government appears ready to seriously address the missed target.
Is South-South trade a realistic alternative for countries overexposed to the US market?
The episode presents two views. Grant argues South-South trade diversification is a structural necessity for countries like Haiti, Cambodia, and Lesotho, where US exposure exceeds 25 percent of total exports. Miles pushes back, calling it a structural aspiration rather than a near-term solution, pointing to missing infrastructure and the difficulty LDCs face in absorbing export volumes that currently go to the US market.

More episodes

Keep listening

Other episodes of Outside In, newest first.

All episodes of Outside In

Sources

Where this came from

39 reports behind the episode. Every one of them opens where it was published.