Rising global protectionism may delay Bangladesh’s LDC graduation

Rising global protectionism and trade fragmentation could slow economic progress across the wider developing Asia-Pacific region, potentially delaying graduation from least developed country (LDC) status for countries including Bangladesh, according to a new United Nations survey.

The 2026 edition of the Economic and Social Survey of Asia and the Pacific, published last week, said the average additional effective tariff rate imposed by the United States on developing economies in the region has climbed to around 15 percent from about 2.8 percent in 2024.

As a result, several smaller and least developed countries, including Bangladesh, Cambodia, the Lao People’s Democratic Republic and Myanmar, now face 19-40 percent tariffs on exports to the United States.

The report said that such barriers are likely to hold back economic development and delay LDC graduation.

Bangladesh, Nepal and Lao PDR are scheduled to graduate to developing country status on November 24 this year. However, Bangladesh and Nepal have applied to the UN for a three-year deferment until 2029.

The report noted that further tariff adjustments were announced after a United States Supreme Court ruling in February 2026. Policy changes remain highly unpredictable.

As of February this year, tariff rates faced by developing economies in Asia and the Pacific were still higher than in 2024.

The report by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) also said weaker export orders are likely to hit employment, wages and business investment in affected sectors, with knock-on effects for growth and government revenue.

The impact will extend beyond direct exports to the United States. Economies supplying raw materials, parts and components to regional value chains may also see demand fall, according to the report.

In Bangladesh, about one-third of textile and textile product exports depend on imported inputs or upstream trade partners. Disruptions to value chains and trade diversion could also curb productivity growth over time, limiting longer-term economic potential.

“Tariff hikes are estimated to have sizable employment impacts,” said the report. The impact on workers would vary by gender, age, skill level and sector.

Around 3 percent of total employment in the region, roughly 56 million jobs, is linked to final demand in the United States through trade and supply chains. Manufacturing is the most exposed sector.

Lower exports could suppress wages and push vulnerable workers into poverty.

In countries such as Bangladesh, Cambodia, Pakistan and Sri Lanka, the garment industry employs large numbers of informal workers, many of them women.

Compared with registered workers, informal employees have weaker bargaining power, limited legal protection and little access to social security. Many earn below minimum wage levels.

Even if trade tensions ease, lingering uncertainty may discourage firms from rehiring displaced workers. That could force households to cut spending on food, health and education, with long-term consequences.

Bangladesh, Cambodia, Pakistan, Sri Lanka and Vietnam, which face tariffs of about 20 percent, are particularly exposed because labour-intensive goods such as garments, textiles, footwear and leather account for a large share of their exports to the United States.

In Bangladesh and Cambodia, garments and textiles alone make up 50 percent to 80 percent of total goods exports to the US market.

The report also said that women dominate employment in these sectors, especially in lower-skilled, routine jobs such as sewing, cutting and finishing. Women account for around seven in ten readymade garment workers in Bangladesh and Sri Lanka, and about eight in ten in Cambodia.

Pay in these industries often sits at or just above the minimum wage, and access to unemployment benefits or other safety nets is limited.

In Bangladesh, about 32 percent of RMG workers earn below the minimum wage, and roughly 7 percent earn incomes below the international poverty line.

Gender pay differences persist across these labour-intensive sectors.

In Vietnam’s garment sector, female wages are estimated to be about 15 percent lower than those of men. With limited opportunities to shift into alternative employment, women and low-skilled workers are especially vulnerable to job losses and wage cuts.

Informal and subcontracted workers face the greatest risk if export demand weakens. These jobs usually offer no notice period, little job security and no social protection. They are usually the first to be cut and the last to return.

The survey also finds a clear divergence in firm performance.

Companies linked to the United States market were 14 percentage points less likely to report production growth. By contrast, firms supplying the European Union were 16 percentage points more likely to post increases.

The report added that many firms will struggle to diversify export markets quickly, given intensifying global competition and uncertain demand in major economies.