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Washington's tariffs on Indian imports threaten to undermine New Delhi's carefully balanced economic strategy. Automobiles, electronics and pharmaceuticals - all key growth engines - rely on global supply chains that tariffs disrupt. Consequently, India's growth forecast for 2026–27 has been downgraded from 6.5% to 6.3%.

Finance Minister Nirmala Sitharaman expects that India has the capacity to absorb shocks. Definitely, she has the right to sound confident, but it is also undeniable that resilience has its limits.

Even a small dent in India's expansion can ripple across the wider subcontinent. As India accounts for over 75% of South Asia's GDP, its slowdown can choke trade demand and reduce investment flows to its smaller neighbors.

Bangladesh's economy has been a global success story - growing faster than many of its peers through a mix of remittances, female labor participation and export dynamism.

But that model now faces strain. The US tariffs are threatening its biggest export market. Dhaka needs to accelerate diversification of its higher-value manufacturing - electronics, pharmaceuticals and leather goods.

According to the World Bank, Bangladesh may lose its competitive market unless it improves and modernizes its logistics and supply chain. The tariffs will raise import costs and subsequently will cause inflationary pressures.

Sri Lanka is facing even more uncertainty. The nation is struggling to revive from its 2022 financial meltdown, but in this situation, Colombo now faces the double burden of higher import costs and shrinking export margins.

The government's fragile fiscal balance - reliant on IMF support and a recovering tourism sector - could easily be upset by declining trade revenues. For a nation still haunted by shortages and protests, tariffs imposed thousands of miles away feel like the aftershocks of an earthquake it never caused.

A broader malaise

Protectionism is just one part of today's global economic crisis. The World Bank has warned that the world is on the brink of a series of complex crises, which are looming in a vicious cycle of global recession, political instability and rampant inflation.

Rising prices for essential goods like fuel and food are crushing the poor and widening inequality. At the same time, labor markets are becoming increasingly fragmented and crowded, which makes for more economic turmoil.

For ordinary South Asians, these macroeconomic shifts have paved the way for higher food prices, fewer job opportunities and less purchasing power. The region's celebrated demographic dividend - its young, ambitious workforce - could become a demographic liability if growth falters.

In a sense, the crisis is moral as well as economic. The world's wealthiest nation, built on the premise of free enterprise, is choosing self-interest over shared prosperity. The tariffs may secure a few thousand manufacturing jobs in the American Midwest, but they threaten millions in Dhaka, Colombo and Chennai.

South Asia's policymakers and business communities must work to avoid dependence on a single export market, even if it is the US. Diversification must now be considered existential. Strengthening intra-regional trade, deepening ties with East Asia, Africa and the Middle East, and investing in domestic value chains will be vital.

Bangladesh's possible entry into the Regional Comprehensive Economic Partnership (RCEP), India's renewed courtship of ASEAN and Sri Lanka's cautious bid to rejoin China's Belt and Road orbit together signal an incipient regional recalibration.