Regionomics: South Asia can turn the tide on Trump tariffs

The US-led tariff war, ignited under President Trump’s administration, has struck a nerve in South Asia, inflicting economic distress across the region. With staggering tariffs—up to 44% on countries like Sri Lanka and around 30% on others including Pakistan and India—the region faces a dire trade imbalance and potential loss of billions in exports. The article argues that the temporary pause in these tariffs shouldn’t lull South Asia into inaction. Rather, it must wake up to the neglected potential of regional integration. Despite being home to over two billion people and a $5 trillion economy, South Asia’s intra-regional trade remains pitifully low at just 5%. In contrast, blocs like the EU and ASEAN trade robustly within their regions, highlighting South Asia’s failure to tap into its own backyard.

The piece powerfully advocates for turning crisis into opportunity through “regionomics”—a collaborative economic response to the tariffs that can soften the blow and help reimagine regional cooperation. The potential is undeniable: intra-regional trade could triple from $23 billion to $67 billion by merely reducing trade barriers. But political tensions, especially between India and Pakistan, have long crippled SAARC, the regional cooperation body. The writer proposes a pragmatic step forward—let other SAARC members convene a meeting to explore economic integration and revive the dormant spirit of collective progress. With the Trump tariffs looming like a Damoclean sword, the time is ripe for South Asia to stop undercutting its own growth and start investing in its shared economic future.

Overview:

This article looks into the economic shockwaves of the US-imposed tariffs on South Asia and underscores the urgent need for a regional trade strategy. It examines how interlinked economies, when fragmented, become vulnerable, and how unity can offer economic resilience and diplomatic leverage in the global order.

NOTES:

This article is valuable for understanding the intersection of international economic policy and regional cooperation. It highlights the weaknesses of South Asia’s trade ecosystem and makes a case for economic integration. Aspirants should extract insights on how external shocks (like tariffs) affect regional economies, and how SAARC’s dormancy hampers collective progress. 

Related CSS Syllabus Topics:

• Pakistan Affairs: Regional Cooperation and SAARC
• Current Affairs: Global Economic Challenges
• International Relations: US Foreign Trade Policy
• Economics: Regional Trade and Economic Integration

Notes for Beginners:

South Asia, with over 2 billion people, trades very little among its own countries—only 5% of total trade is regional, while others like the EU do nearly 70%. The US recently imposed heavy taxes on imports from this region, meaning goods from countries like Pakistan and India became more expensive in American markets. This could cost South Asia around $40 billion. But the region has a way out: if countries trade more with each other, they can reduce losses and grow stronger together. For example, if Pakistan and India improved trade ties, their current trade of $2.5 billion could shoot up to $37 billion, according to the World Bank.

Facts and Figures:

• US tariffs: 44% on Sri Lanka, 37% on Bangladesh, 29% on Pakistan/Nepal, 26% on India
• South Asia’s exports to US in 2024: $83.6 billion
• South Asia’s imports from US in 2024: $43.8 billion
• Intra-South Asia trade: Only 5% of regional trade
• Potential intra-regional trade: From $23 billion to $67 billion
• Pakistan-India trade potential: $37 billion vs current $2.5 billion

To wrap up, This article is a wake-up call for South Asia to shed its disunity and adopt economic pragmatism. The Trump tariffs, though disruptive, offer a golden chance to rethink regional alliances. Only by building bridges, not walls, can South Asia weather global shocks and unlock prosperity rooted in cooperation rather than competition.