The World Bank has issued a sobering warning for South Asia, forecasting that the region’s economic growth will slow down significantly in 2026 due to escalating trade tensions and tariff hikes imposed by the United States. In its latest report, published on October 7, the multilateral lender revised its growth projection for South Asia from 6.4% to 5.8%, citing the ripple effects of Washington’s aggressive trade measures and a broader global economic slowdown.

The downgrade underscores how US protectionist policies under President Donald Trump’s administration are beginning to reverberate across developing economies, particularly in manufacturing-dependent regions like South Asia. With tariffs now targeting key exporters such as India, Bangladesh, and Sri Lanka, economists fear that the region’s recovery momentum – built on post-pandemic resilience, robust consumption, and export diversification – could falter in the coming years.

According to the World Bank, higher tariffs have made it more expensive for South Asian nations to import raw materials and intermediate goods, which form the backbone of their export-oriented industries. Washington’s 50% tariff on most Indian imports, introduced in August, coupled with punitive levies of 25% on Indian purchases of Russian oil, have dealt a dual blow to New Delhi’s economic plans. Meanwhile, Bangladesh faces a 35% tariff, and Sri Lanka a 20% levy – measures that threaten to undermine their fragile economic recoveries.

These tariffs, originally designed to penalize countries maintaining trade ties with Russia or running large surpluses with the US are now exacting a heavy price on domestic industries. For instance, Bangladesh’s textile sector – a cornerstone of its economy – relies heavily on imported fabrics, machinery, and dyes. The new tariffs could inflate production costs, making........

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