ECONOMYNEXT – South Asian nations ought to use the present hit from Trump tariff shocks to overtake home insurance policies and put the nations on a sounder path, a gaggle of regional economists have mentioned.
“Pakistan has began implementing a forward-looking New Tariff Coverage,” the economists mentioned.
“Bangladesh is enterprise vital tariff-related reforms, each within the space of the institutional framework, as additionally tariff liberalization.
“However extra must be executed in each South Asian nation to enhance the funding local weather, scale back commerce safety (the place South Asian nations are outliers), pare regulatory boundaries, and create extra and higher jobs.”
Sri Lanka, different observers say has seen de facto de-minimis ending and and now on-line purchases are additionally taxed in a strengthening of protectionism happening to the bottom stage.
The joint assertion by South Asian economists is reproduced beneath:
In Turbulent Commerce Occasions, South Asia Wants Reform, Cooperation, and Resilience
We’re economists from South Asia who convened on-line not too long ago to debate the influence of the brand new US tariffs on our nations. Primarily based on our dialogue, we want to put out the next assertion for consideration by nationwide coverage makers.
The world buying and selling system is in turmoil. Since “liberation day” tariffs have been introduced in April 2025, the USA has introduced country-specific tariffs that diverge from the precept of most-favored nation (MFN) commerce. Common US tariffs on imports from the world reached 17.4% in September 2025, the very best stage since 1935.
This abrupt change has fueled a surge in world financial uncertainty. The World Uncertainty Index has risen from 21,424 in August 2024 to 105,558 in August 2025, a five-fold enhance. This uncertainty weighs closely on the world economic system, distorts funding choices and undermines sound financial decision-making. The general uncertainty, though emanating from tariffs on items, additionally impacts commerce in companies.
The CSEP-Commerce Sentinel Tariff Influence Device exhibits a blended image for South Asian nations. India’s exports to the US are projected to undergo considerably because of the mixed 50% tariff (25% reciprocal plus 25% punitive). Nepal and Pakistan present modest positive aspects, whereas Bangladesh and Sri Lanka face export losses.
For Bangladesh and Nepal – attributable to graduate from least developed nation standing in 2026 – the present surroundings of uncertainty within the worldwide commerce panorama compounds the challenges of sustainable commencement.
South Asian nations mustn’t get caught up in celebrating one other nation’s misfortune. A slowing world economic system will have an effect on all nations, and the present surroundings may be very fluid: circumstances may change in a single day for any nation, for higher or worse. South Asia’s policymakers needs to be guided by their medium-to long-term pursuits, and take into cognizance the larger image. On this context, we put ahead 4 particular ideas.
First, use the disaster as a chance for home reform. India has, for instance, executed an overhaul of its Items and Companies Tax, and Pakistan has began implementing a forward-looking New Tariff Coverage. Bangladesh is enterprise vital tariff-related reforms, each within the space of the institutional framework, as additionally tariff liberalization. However extra must be executed in each South Asian nation to enhance the funding local weather, scale back commerce safety (the place South Asian nations are outliers), pare regulatory boundaries, and create extra and higher jobs.
Second, train financial pragmatism in a geopolitically tense world. Commerce immediately improves lives, whereas geopolitics is usually intractable. Foregoing the roles and incomes that commerce may generate is a luxurious the tens of millions of poor folks in our area can ailing afford. If China and India, or Japan and South Korea – to offer simply two examples – will be dynamic buying and selling companions, there isn’t any motive why South Asian nations, together with India and Pakistan, can not decouple their commerce and political tracks.
It’s unlucky that no severe bilateral, not to mention regional, dialogues on commerce are happening in South Asia, the world’s quickest rising area, even because the hole between precise and potential commerce continues to widen. Extra regional commerce may assist present some stability to counterbalance present world commerce volatility. It may possibly additionally function a springboard to South Asian nations to deepen their integration into world worth chains.
Third, pivot to Asia. That is the Asian century, however South Asia and East Asia, for instance, have adopted totally different growth paths. Absolutely the hole between the 2 areas has widened enormously. South Asia would do nicely to make the most of East Asia’s dynamic provide chains and faucet into its growing demand, with imports of products and companies including as much as USD 9 trillion in 2024.
On the western facet of the area, integration with Central Asia – an enormous, resource-rich hinterland – provides a chance to diversify provide chains, safe power and useful resource flows, and entry new Eurasian markets.
Lastly, push to strengthen multilateral boards, significantly the World Commerce Group. The WTO (and its predecessor, the GATT) has supplied the institutional basis for the rules-based commerce order, supported particular and differential remedy for least developed nations, and ensured a voice for small states.
It additionally serves as a important discussion board for debate and dialogue, together with for figuring out and agreeing to measures for profitable LDC commencement. It’s within the robust pursuits of South Asian nations to assist and strengthen the WTO. A collective strategy to this endeavor will ship more practical outcomes.
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Signed by:
Mustafizur Rahman, Distinguished Fellow, Centre for Coverage Dialogue (CPD). Bangladesh.
Sanjay Kathuria, Co-Founder, Commerce Sentinel, and Visiting Senior Fellow, Centre for Social and Financial Progress (CSEP). India. (Convenor)
TG Srinivasan, Co-Founder, Commerce Sentinel, and Visiting Senior Fellow, Centre for Social and Financial Progress (CSEP). India.
Paras Kharel, Govt Director, South Asia Watch on Commerce, Economics and Setting (SAWTEE). Nepal.
Vaqar Ahmed, Senior Analysis Fellow, Partnership for Financial Coverage (PEP), and President-Elect, Rotary Membership of Pakistan Company (RCPC). Pakistan.
Subhashini Abeysinghe, Analysis Director, Verité Analysis. Sri Lanka.
