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Trade Trends: Tariff Tension and the Rise of the Global South
Kate Nishimura
7 min read
The global South has reached “an inflection point” in its growth within the worldwide sourcing landscape, with countries across Asia, Africa and Latin America gaining ground against the world’s largest economies.
As U.S.-China tensions simmer, “middle powers”—like India, Indonesia, Brazil, Egypt, Ethiopia and others—”are in a position to exert greater influence on the global system as their economies grow,” says a recent report from global management consulting firm Kearney.
According to Terry Toland, a principal in the group’s internal think tank on global business policy, “It is striking, just in the context of apparel and textiles, how many global South countries are front and center,” with China, Bangladesh, Vietnam and India making up 47 percent of global textile and apparel trade collectively. “The influence of these nations and their shaping of that industry in particular is difficult to overstate.”
The firm’s researchers have been monitoring the economic growth of countries outside of Europe and North America for some time, and they have noted “steady gains and advances in [their] role on the global stage,” Toland told Sourcing Journal. “But we believe now [they’re] at a moment of inflection as a result of a combination of forces all kind of converging at similar times.”
For example, the BRICS Alliance—named for Brazil, Russia, India, China and South Africa—has seen surefooted expansion in recent months. The trade bloc, which seeks to unseat the U.S. and its dollar as the most prominent economy and currency, has come to represent about one-quarter of the world’s GDP and exports and half of the global population with the recent additions of Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates. “That’s a really staggering impact in and of itself,” Toland said.
At the same time, South-to-South trade is on the rise; about 35 percent of global trade is now just between global South countries. “We’ve seen notable upticks in foreign direct investment” in countries like Indonesia, the Philippines, Malaysia, Thailand, Singapore, Vietnam, he added.
“But perhaps most striking is the rise in the middle class; just since the turn of the century in 2000, there were roughly 150 million middle class individuals in China, India and the ASEAN countries combined. Today, that’s estimated to be around 1.5 billion.” Some projections show that number surging to as many as 3 billion by 2030, and those individuals represent not just a burgeoning workforce, but an expanding consumer base.
“There’s a lot of dynamism going on” regarding the makeup of certain developing economies, Toland said. Kearney regularly assesses demographic data, and “the numbers are very much of interest in the global South; particularly in countries like India, we see a huge number increasingly well-educated young people representing a very attractive destination for foreign investment and budgets to do business.”
Africa, too, is being eagerly eyed by investors across the globe, who are looking to tap new wells for sourcing as well as selling. “We do see a number of the fastest growing economies are coming from Africa,” from Uganda (projected to see 5.6-percent growth in GDP, constant prices and exchange rates by 2030) to Mozambique at 5.2 percent, Tanzania (4.6 percent), Ghana (4.5 percent), Zambia (4.3 percent and Kenya (4.2 percent). Morocco, Botswana, Seychelles, Egypt and Angola are expected to see over 3-percent growth.
“There seem to be a lot of opportunities in the apparel industry for a lot of African nations,” Toland said. Bangladesh, the second-largest apparel exporter in the world, “was quite a model in pursuing textiles and apparel as a way to boost its GDP and reduce poverty,” he added. “There’s been some speculation that a number of these African countries could pursue similar paths.”
To no one’s surprise, Latin American countries like Mexico are continuing to benefit from supply chain diversification efforts and an appetite, especially in the U.S., for nearshore options. Mexican exports to the U.S. ballooned by 20 percent between 2020 and 2024, while direct exports from China to America fell by 4.2 percent during the same period. Mexico became the biggest trade partner to the U.S. in 2023.
“When you take all these factors together—increased FDI, surging exports, increased trade, and just the overall spending power of the populations in these regions—it’s really quite significant,” Toland said. “And then when you put this in the context of the geopolitical moment we’re in now, where we’re seeing more of a multipolar world emerge, I think this is a pivotal moment for the global South to increasingly assert itself on the global stage.”
But navigating the rocky terrain between the world’s biggest economies—China and the U.S.—has already thrown new challenges into the mix. Russia, too, has engaged in campaigns to grow its influence and engender support from nations in the global South (see: the growth of the BRICS Alliance, even in the face of the internationally unpopular war on Ukraine).
One of the most prominent weapons in the widening trade war is, of course, tariffs. Kearney analysts projected that the use of duties both in a punitive and retaliatory capacity will increase over the next five years, and it won’t just be global superpowers lobbing sanctions at each other (though U.S. President Donald Trump has been fanning the tariff flames for months).
“This idea that geopolitics is back, I think, is very front of mind for people. For those of us that work in the foreign policy space, we’d argue that it’s never gone away, but it’s certainly been much more front of mind,” Toland said. “But it’s not just the U.S. and China that have been engaging in these tariffs; there’s been a number of countries that have been pursuing them.” Several countries have imposed tariffs on Chinese imports in recent years, for example, including Brazil, Canada, Mexico, South Africa, and Turkey, in addition to the European Union. Mexico in December implemented a universal 35-percent textile and apparel tariff.
“Others have been using different tariff vehicles in recent years, and this is something of a shift back to a previous era before the end of the Second World War,” Toland explained. The levying of tariffs has “ebbed and flowed,” but it’s seeing a decided resurgence as many countries develop more protectionist mindsets and others seek to form like-minded blocs with nations that can benefit their economies and reinforce their values.
“One of the main reasons is also the desire to improve resilience and domestic capacity—this was a lesson that a lot of countries felt acutely as a result of the pandemic,” the Kearney principal added. Many countries once dependent on China and Asia have also been exploring industrial policies that would strengthen their home markets for manufacturing and reduce reliance on foreign production.
For the U.S. the justification for duty-slinging varies country to country. Upon his return to office, Trump commissioned reporting from government agencies on existing trade relationships and agreements, and the compliance of trade partners with U.S. trade law. He intimated that the assessment, due April 1, would direct the administration’s trade strategy, though many believe he’ll use it to justify a wide-ranging and expeditious levying of tariffs. For now, though, the president is holding off on pulling the trigger.
That shouldn’t serve as evidence that the tariff trend will fade fast. “Based on our reporting and analysis, we don’t see it going away in the short- or medium-term,” Toland said. “It’s a reflection of the era we’re in.”
