The pathway to economic development through export-oriented industrialisation is facing increasing challenges for many low- and middle-income countries, as barriers to accessing wealthy consumer markets grow more pronounced. Recent trade measures imposed by the United States, alongside evolving policies in Europe and elsewhere, signal a shift away from the long-standing global consensus on free trade that has historically supported growth and poverty reduction in developing economies.

Earlier this year, the United States imposed steep preliminary tariffs on solar cells and modules imported from India, followed by a similar trade petition against Ethiopia. While initially seen as part of former President Donald Trump’s “America First” trade agenda, these actions also highlight a broader trend: richer countries are adopting more restrictive policies that complicate market access for exporters from developing regions. Export-oriented industrialisation—an established route to prosperity demonstrated by the industrial revolutions in Britain, Germany, the US, and more recent success stories like South Korea and China—depends heavily on open access to advanced economies, which is now becoming more constrained.

Economists point to substantial evidence that exporting to wealthier markets boosts firm productivity, encourages technological advancement, and raises wages and incomes within developing countries. Despite these benefits, the US has expanded its trade tools beyond the Supreme Court’s recent limitation on emergency tariff powers, invoking statutes such as Section 301 of the Trade Act of 1974. The US Trade Representative has launched investigations into “structural excess capacity” in 16 export-oriented economies, including both high-income countries like the European Union, Japan, and South Korea and middle-income nations such as Bangladesh, Indonesia, and Vietnam. Beyond addressing possible trade rule violations, these cases question whether persistent trade surpluses from these countries undermine US manufacturing competitiveness.

This approach reflects growing skepticism among wealthy countries about free trade’s impacts. Under the Biden administration, steel and aluminum tariff investigations persist, and the Inflation Reduction Act’s sourcing mandates have drawn criticism and challenges at the World Trade Organization for discriminating against foreign producers. Meanwhile, the European Union’s carbon border adjustment mechanism (CBAM) imposes costs on imports based on their carbon emissions, which developing countries—including India and South Africa—contend functions as a new non-tariff barrier and have signaled intentions to challenge it through the WTO.

China, often viewed as an alternative market for developing countries, has not fully opened low-end manufacturing sectors that historically provided entry points for poorer countries into global trade. Although Beijing offers zero-tariff access to exports from 53 African nations and maintains trade partnerships with larger middle-income economies such as Brazil, Chinese producers remain dominant in labor-intensive sectors like garments, footwear, furniture, and toys. This presence makes it difficult for firms from low- and middle-income countries to compete both within China and in third-party markets.

In response to these challenges, regional integration offers a partial solution. Initiatives like the African Continental Free Trade Area, encompassing 54 African nations, and Asia’s Regional Comprehensive Economic Partnership, which includes countries such as New Zealand and Australia, demonstrate how broader regional markets can provide growth opportunities across varying income levels. Diversification of trade partners and sectors is also critical, as seen in recent agreements involving India, Indonesia, Mercosur, and the EU.

Experts emphasize the importance of strategic negotiation by developing countries. Rather than focusing solely on tariff reductions, poorer nations might leverage their access to critical minerals, strategic ports, or consumer markets to secure investments in manufacturing capacity, infrastructure connectivity, technology sharing, joint ventures, and technical assistance.

While the export-led industrialisation model is not obsolete, its traditional assumptions are eroding. Developing countries can no longer count on consistent market access or tolerance of trade surpluses from their products in wealthy economies. The ladder to economic prosperity remains, but its rungs are narrowing and being moved higher, requiring adaptation and more sophisticated policy approaches.