By Yafet Girma | April 11, 2025
KEYIR NEWS:- The global economy stands at a critical juncture, teetering under the weight of intensified trade tensions ignited by the resurgence of protectionist policies under former U.S. President Donald Trump. With his return to the global stage—whether through renewed political activity or enduring ideological influence—Trump’s aggressive tariff-centric trade philosophy has reignited economic tremors across continents. Developing economies, in particular, find themselves navigating increasingly volatile waters, as the world’s economic structure shifts under mounting geopolitical and fiscal pressures.
At the core of the current unrest lies the reimplementation and expansion of Trump-era tariffs, particularly targeting major trading partners such as China, the European Union, and a slew of emerging markets. Originally framed as measures to “protect American industry and labor,” these tariffs now serve as catalysts for a wider pattern of economic disruption, impacting global trade flows, foreign direct investment (FDI), and commodity markets.
President Trump’s renewed emphasis on economic nationalism—characterized by punitive tariffs on steel, aluminum, semiconductors, and even consumer goods—has reverberated through global supply chains. According to the World Trade Organization (2024), global merchandise trade volumes shrank by 2.7% last year, reversing the modest growth observed in 2023. The contraction is attributed primarily to reduced transpacific trade and retaliatory measures from affected nations.
Developing countries, many of which rely heavily on export-led growth models, are disproportionately affected. Nations in Sub-Saharan Africa, Southeast Asia, and Latin America are experiencing a dual burden: declining export revenues and rising costs of imports, particularly for essential goods such as fuel, machinery, and agricultural inputs.
“Tariffs do not exist in a vacuum,” explains Dr. Yara Suleiman, a trade economist at the London School of Economics. “For emerging markets, even a marginal increase in trade friction can spiral into macroeconomic instability, given their structural vulnerabilities and external debt exposure.”
One of the most immediate consequences of Trump’s tariff blitz is the phenomenon of imported inflation. As the cost of imported goods rises—either due to tariffs directly or due to currency depreciation triggered by declining investor confidence—developing economies are witnessing a resurgence in inflationary pressures.
In Nigeria, for example, inflation surged to 23.5% in early 2025, driven largely by higher prices for imported food and fuel. Similarly, Argentina saw its peso fall by 18% against the U.S. dollar over a six-month period, leading to a sharp increase in the price of consumer goods and further complicating efforts to stabilize the economy.
The International Monetary Fund (IMF), in its Global Economic Outlook (2025), warned that “a significant proportion of developing economies are now at risk of stagflation—a toxic mix of stagnant growth and persistently high inflation—largely due to trade shocks and capital outflows.”
Simultaneously, many developing nations are grappling with the complexities of safeguarding their economic sovereignty in the face of multinational dominance. In sectors ranging from mining and oil to telecommunications and agriculture, foreign corporations wield immense power, often eclipsing local firms in scale and influence.
As trade becomes more precarious, governments are turning to their natural resources and domestic markets as bulwarks of stability. However, attempts to assert greater control over strategic industries—such as resource nationalization or higher taxation on foreign firms—frequently lead to capital flight or divestment.
Take the Democratic Republic of the Congo (DRC), where recent reforms to mining laws—including increased royalties on cobalt and copper—have triggered backlash from multinational giants such as Glencore and China Molybdenum. Although intended to channel more wealth into public coffers, these measures have sparked fears of disinvestment, threatening both employment and revenue streams.
“The dilemma is stark,” says Professor Mariana Kroll of the University of Cape Town. “Countries must choose between ceding ground to foreign investors for the sake of economic viability or asserting their sovereignty at the risk of financial marginalization.”
The balancing act between attracting FDI and preserving economic autonomy is becoming increasingly intricate. In today’s economic climate, investors are more risk-averse, prioritizing political stability, regulatory predictability, and low operating costs. At the same time, domestic populations are growing more vocal in demanding equitable development, transparency, and resistance to neo-colonial economic patterns.
Countries such as Vietnam and Rwanda are often cited as success stories in achieving this delicate equilibrium. By strategically opening key sectors to foreign capital while enforcing stringent local content laws, these nations have managed to foster robust growth while retaining a measure of control over their development trajectory.
Nevertheless, such models are difficult to replicate in larger or more politically complex nations, where internal divisions and institutional weaknesses limit the effectiveness of policy execution. For every success story, there are cautionary tales of failed privatizations, opaque investment deals, and unsustainable debt accumulation.
Underlying all these developments is a deeper structural transformation in the global economic order. The multilateral institutions that have governed international trade and finance for decades—such as the WTO, the IMF, and the World Bank—are under increasing strain. As nationalism and bilateralism gain ground, collective governance is giving way to fragmented, interest-based coalitions.
This shift is particularly damaging for developing nations, which historically relied on multilateralism to negotiate more favorable terms and resist the pressures of economic imperialism. Now, many find themselves negotiating from a position of weakness, forced to choose between competing global powers in a new era of economic Cold War.
“Globalization is not ending—it is mutating,” argues Dr. Li Cheng, director of the Brookings Institution’s Global Economy Program. “We’re seeing a reconfiguration of economic alliances, driven not by comparative advantage, but by strategic interest. And that makes life infinitely harder for the global South.”
What, then, is the path forward for developing nations caught in this tempestuous landscape? Experts emphasize the importance of economic diversification, regional integration, and institutional reform. Strengthening intra-regional trade, investing in education and digital infrastructure, and building robust financial systems are all critical to insulating these economies from external shocks.
Moreover, there is growing advocacy for a rethinking of global trade rules—one that re-centers equity, sustainability, and mutual accountability. Initiatives like the African Continental Free Trade Area (AfCFTA) and the BRICS+ coalition offer promising avenues for alternative models of cooperation and growth.
However, change will not come easily or quickly. In the short term, developing nations must weather a perfect storm: a protectionist superpower, unstable capital flows, and internal governance challenges. In such a scenario, strategic patience, bold policy innovation, and collective action will be the true currencies of survival.
As President Trump’s legacy of economic brinkmanship continues to cast a long shadow over the global economy, the choices made today by the world’s most vulnerable nations will shape not only their own destinies but also the future contours of globalization itself.