Trump's Tariffs Will Hurt The World's Poor The Most

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The post-Cold War era of globalized trade and economic growth has witnessed the largest reduction in extreme poverty in the shortest period in human history. The percentage of the global population living in extreme poverty, according to World Bank data, has fallen from nearly 31% in 1990 to 8% today. Tariffs could destroy many of the jobs that have allowed these people to improve and extend their lives.

Vietnam, which is slated to have a 46% tariff placed on its goods at the expiration of the current 90-day pause, is a good case in point. Nike produces half of its shoes in Vietnam, and its 162 supplier factories employ nearly half a million workers. Similarly, Apple's Vietnamese suppliers employ almost 200,000 workers in their factories.

Jobs such as these contributed to Vietnam's extreme poverty rate falling from 30% in 2000 to about 2.5% before the onset of the Covid-19 pandemic. Even jobs in Vietnamese apparel factories that have been singled out for protest as so-called“sweatshops” pay an average wage of nearly US$10 a day-more than four times higher than the $2.15 per day the United Nations and World Bank use to demarcate extreme poverty around the world.

Profit margins for these suppliers are not typically more than 5%. A 46% tariff would destroy jobs in these factories and risk returning the workers to much lower wages in the“informal” sector of their economy, where more than 20% of Vietnam's population still subsists on less than $6.85 per day.

The trade war would be even more disastrous for Bangladesh, which is facing a 37% tariff. Its garment industry employs four million workers and comprises 13% of the country's entire economy and 80% of its exports.

The growth of Bangladesh's apparel industry has played a major role in reducing its extreme poverty rate by two-thirds: from more than 30% in 2000 to a little over 10% before the pandemic.

Bangladesh's population in 2000 was just shy of 135 million. That means some 40 million people were living in extreme poverty at the time. In 2020, with a population that had grown to 166 million, just 17 million were living in such conditions.