Enlightened Interest: the EU should support poor countries hit by Trump tariffs

By Colette van der Ven. Claudia Azevedo contributed to this article.

This op-ed was first published on Borderlex on 23/04/2025.

Ursula von der Leyen’s initial reaction to Trump’s ‘reciprocal’ tariffs included acknowledging their severe impacts on the world’s poorest countries. But the European Commission has since then failed to develop a concrete plan to show solidarity.

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Earlier this month, the Trump administration shocked the world by announcing the adoption of so-called “reciprocal” tariffs in an ill-conceived attempt to reduce the United States bilateral trade deficit in goods to zero.

The world’s least-developed countries have been hit hard: goods exported from Lesotho to the US will be subject to 50% tariffs, Cambodia 49%, and Bangladesh 37%.

Fill the soft power vacuum

These tariffs are momentarily suspended. But they will have dramatic consequences for poverty rates, unemployment, and political stability.

Countries where tariffs will have the most impact, including Bangladesh and Cambodia, risk losing as much as 380,000 jobs. The garment industry will be most affected. The sector  employs mostly women, and has been critical to poverty reduction efforts in these countries.

The simultaneous withdrawal of USAID funding will make the impact even more severe.

And unlike larger economies, such as China and the European Union, which will eventually recover, the world’s most fragile developing countries will be set back by years, if not decades.

European Commission president Ursula von der Leyen noted that “the consequences will be dire for millions of people around the globe. Also, for the most vulnerable countries, which are now subject to some of the highest US tariffs.”

However, the commission has failed thus far to set out a vision or action plan for the EU to show solidarity with vulnerable countries most disproportionately affected by Trump’s tariffs.

The withdrawal of the US from international aid and disregard of trade preference programs, among other actions of the Trump administration, leaves a “soft power” vacuum.

It is in the EU’s self-interest to fill this vacuum, positioning itself as a reliable and alternative partner to both the US and China, thus reinforcing its global relevance.

Refrain from protectionism and keep aid flowing

First and foremost, the EU should refrain from protectionist action.

Staying open to imports from the world’s poorest countries is line with the EU’s values and commitment to contribute to peace, security, sustainable development, free and fair trade, the eradication of poverty and the protection of human rights, as expressed in the Treaty of Lisbon.

The EU must also step up financial support to LDCs. The EU is the world’s largest provider of overseas development assistance. Despite a commitment by EU member states to gradually increase the percentage of ODA going to LDCs, between 1990 and 2022 the share of ODA going to LDCs dropped from 52% to 19%.

A large amount of these funds are being  repurposed and reallocated to support investments in the context of the EU’s Global Gateway to prioritise transformational green and digital infrastructure investments in third countries.

With a shift in political priorities outlined in the new Clean Industrial Deal the commission will be tempted to increasingly link overseas development aid with its geostrategic interests in accessing clean energy, technology and critical raw materials.

As part of this shift, the commission has announced Clean Trade and Investment Partnerships to deepen engagement with strategic partners, supported by Global Gateway investments.

Most LDCs will  likely not be considered for CTIPs, as they are not home to significant mineral reserves or clean industries.

It is imperative that the commission resists this purely transactional approach and continues to allocate sufficient funding to LDCs – both with regards to the current budget, as well as the next budget, which will go into effect in 2028. The commission is also legally bound by Article 208 of the Treaty on the Functioning of the European Union, which notes that overseas development assistance’s primary objective is reducing and eradicating poverty.

Reform the EU’s developing country trade preference system

The EU’s Generalized Scheme of Preferences removes import duties from covered products from eligible developing countries. Many developing countries hit by the Trump tariffs previously benefited from preferential market access under US GSP or the African Growth and Opportunity Act known as AGOA.

The EU needs to continue to grant preferential market access under its GSP scheme. While trade preference alone are insufficient for LDCs to effectively industrialize and upgrade into higher value activities in global supply chains, they can serve as critical trade enablers.

This is an opportune moment to accelerate ongoing negotiations to reform the EU GSP, and adopt some elements of the commission’s proposed 2021 GSP reform package.

Under the EU GSP’s Everything but Arms program, LDCs enjoy duty-free, quota-free market access to all products except arms. When countries graduate from LDC status, they lose access to EBA. This implies a substantial economic loss and can create a serious shock to a country’s GDP – especially in light of the recently announced tariffs that will render US exports prohibitively expensive for LDCs.

This can be mitigated if countries qualify for the EU’s GSP+ scheme, under which they can continue to benefit from EU market access preferences in return for complying with an array of international conventions on human and labour rights and the environment.

However, doing so is not straightforward.  For instance, Bangladesh is expected to graduate from the LDC category in 2026. But the South Asian country does not meet the import-share part of the vulnerability criteria needed to qualify for GSP+, requiring that the country’s average EU import share over the past three years is lower than 6.5%. The commission has proposed removing this import-share criterion: that would ensure a smoother transition to GSP+ status.

LDC countries that are expected to graduate in the near future  include not only Bangladesh but also Laos, Nepal, Solomon Islands, Cambodia and Senegal. And many will be heavily hit by Trump’s tariffs.

Support compliance with EU green trade measures

The commission must also prioritise supporting LDCs’ compliance with green trade measures, in particular the Deforestation-free Products Regulation and Eco-design for Sustainable Products Regulation.

While the former will be important for cocoa, coffee, palm oil and other covered producers, the latter could significantly impact LDC garment exports to the EU.

To avoid a situation where LDC exports are hit by the dual challenge of US tariffs and EU green regulations, the EU could consider providing an extended transition time for products from LDCs.

During this transition, the EU should actively assist LDCs in developing compliance strategies. It could support assessments that measure the EUDR impact on a country and enter into country-specific partnerships, that set out technical and financial support.

With regards to complying with circular economy standards of the ESPR in the garment sector, the commission should promote investments in circular garment manufacturing processes, increase technology transfer, consider the equivalence of different circular products and production standards, and assist LDCs in developing digital product passport technologies.

Lead a coalition of the willing

The EU does not need to go at it alone. It could consider setting up an international coalition of like-minded countries to coordinate international support to the most affected LDCs.

This could be organised on the sidelines of the G20 Summit, which this year is presided by South Africa and will take place in Johannesburg in November.

Through this coalition, aid efforts could be more specifically targeting heavy-hit countries and industries and be more far-reaching.

Countries that are part of the coalition could also pledge to continue to provide, and step-up where needed, preferential market access for LDCs while reducing non-tariff barriers.

Finally, such a coalition could be used to coordinate reactions to the US tariffs, or countermeasures, ensuring that LDCs, who are being disproportionately hit, are not overlooked.

In an increasingly transactional world, global solidarity is ever-more important, if only because when the least developed countries thrive, so does the world.