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September 5, 2025Open Access

Asymmetric Economic Impact of U.S. Tariffs on Low-Income Countries: A Focus on South and East Asia

Key Points

U.S. tariffs lead to greater GDP reductions in low-income countries compared to higher-income nations.
The impact of tariff shocks on export competitiveness is magnified in economies like India and Vietnam.
Empirical trade data reveals that structural dependency and limited fiscal buffers increase vulnerability to tariffs.
The findings suggest a need for adjustments in U.S. trade policy, considering the specific challenges of lower-income economies.

Abstract

Abstract This manuscript examines the asymmetric economic effects of U.S. tariffs on developing economies, with a regional focus on South and East Asia — specifically Indiaand Vietnam. Using empirical trade data, regression modeling, and policy analysis, itdemonstrates that U.S. tariffs disproportionately harm lower-income Asian economiesdue to their structural trade dependency, limited fiscal buffers, and institutional fragility.The analysis reveals that identical tariff shocks lead to significantly greater reductionsin GDP growth and export competitiveness in India and Vietnam compared to higherincome countries. These outcomes are supported by quantitative findings showing themagnified impact of tariffs on countries with lower GDP per capita. The paper alsoexplores broader strategic and legal implications for the global trade order, includingthe weakening of WTO norms, the lapse of the Generalized System of Preferences(GSP), and the increasing use of national security exemptions. Policy recommendationsare offered to encourage a development-sensitive U.S. trade strategy that accounts forthe vulnerabilities of Asian economies. Keywords: Trade policy, U.S. tariffs, India, Vietnam, South Asia, East Asia, Tariff Shocks.JEL Classification: F13, O24, F14, F63 JEL Classification: F13, O24, F14, F63

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