LDC exports to the US currently face tariffs more than twice the rate applied to developed economies. Expanding trade with other countries, especially in the Global South, could help cushion the impact of new US tariffs while promoting diversification.
For over a decade, least developed countries (LDCs) and the international community have pursued an elusive goal: doubling the share of LDCs’ global exports from 1% to 2%.
More than ten years after the target was first set in the Istanbul Programme of Action – and later reaffirmed in Sustainable Development Goal 17.11 – the world remains largely off track, with LDCs’ share standing at just 1.1%.
Instead, what has nearly tripled is the average tariff they face in the United States market – a trend that could make achieving the goal even harder.
LDC exports to the US currently face a weighted average tariff exceeding 28% – more than twice the rate applied to developed economies.
Over the past year, tariffs on exports from 44 LDCs to the US have tripled, as the country has departed from the most-favoured-nation principle – which requires equal tariff treatment for all trading partners – and from the essence of special and differential treatment – which grants developing countries more favourable terms – both enshrined under World Trade Organization (WTO) rules.
Reciprocal and sectoral tariffs, combined with the expiration of preferential schemes, have resulted in tariff hikes for LDCs.
Since April 2025, the US has replaced its previous tariffs on LDC exports with higher, country-specific and sectoral rates. Meanwhile, the country’s preferential arrangements for LDC exports expired on 30 September 2025.
The combined effect is eroding LDCs’ already limited competitive edge and threatens to undermine years of hard-won development gains made by these countries.
What key sectors face high tariffs?
Tariffs have risen sharply on both agricultural and manufacturing exports from LDCs – by more than 14 percentage points on agricultural and food products and over 20 points on manufactured goods.
These increases will disproportionately affect countries preparing for graduation from LDC status, particularly those in Asia, for which the US market plays a more significant role as an export destination.
Higher levels of US protection on manufacturing, agriculture and food risk dampening LDCs’ hard-won progress in building productive capacities, reducing commodity dependence and promoting value addition.
The textile and apparel industry, an important source of employment for women in many LDCs, has been hit hardest.
The situation is worsened by the loss of preferences under the African Growth and Opportunity Act (AGOA), the Haiti Economic Lift Programme (HELP) and the Haiti Opportunity, Growth, and Prosperity Act (HOPE) – which may further reduce LDCs’ competitiveness.
For several countries, such as Haiti, Cambodia and Lesotho, the US is a major export market, accounting for more than 25% of their total exports.
Preferential access previously enabled these countries to strengthen their competitiveness, thereby promoting industrialization and related positive spillover effects. The new policy changes, however, threaten to stall progress on enhancing women’s economic empowerment and participation in the workforce.
How can LDCs move forward?
Despite these challenges, opportunities for diversification exist, especially within the Global South.
The importance of the US as an export destination for LDCs has been on a downward trend over the past two decades. The US currently accounts for slightly more than 8% of their total exports.
By expanding trade with other countries, especially in the Global South, LDCs could help cushion the impact of the new US tariffs while promoting diversification. By deepening regional integration and reducing intra-regional trade barriers, LDCs could strengthen trade links with neighboring economies, diversify export destinations and reduce reliance on a few markets or unilateral preferences.
Such efforts would enhance their resilience to external policy shocks and better equip them to sustain growth amid global uncertainties.
Special and differential treatment under WTO rules, including duty-free, quota-free market access, has long supported LDCs in boosting their participation to international trade.
Although the effectiveness of such measures has been uneven, their abrupt withdrawal from the US market is unlikely to accelerate progress towards structural transformation in LDC economies. Reversing recent tariff policies would instead help restore a predictable and enabling environment for LDCs, especially for those in the process of graduation.
At the same time, LDCs must take proactive steps to reduce their exposure to external shocks.
Deepening regional integration, strengthening regional value chains, simplifying trade procedures, and promoting trade facilitation would help them diversify exports, move up the value chain and build greater economic resilience.
Such efforts would not only mitigate the impact of external trade shocks but also foster industrial development, create jobs and advance progress towards achieving LDCs’ development goals.