If the US withdraws from TPP, and imposes high tariffs on goods imported from China and Mexico, it would be good news for South Asia. From TPP alone, exports of textiles and clothing from Vietnam--a major competitor for South Asian countries--would have increased by 40 per cent, mostly due to the implied zero-tariff access to the US market. This would have caused large losses to exports of textiles and clothing from Nepal and Bangladesh.

But given a US pullout from TPP, the predicted negative impacts on South Asia would not happen. Also, if the US raises tariffs for imports from China and Mexico by 10 percentage points, exports from these two countries to the US would reduce by 35 per cent and 25 per cent respectively. South Asian countries would be able to scale up their exports to the US as a result.

The US is a key export market for many South Asian countries. The top export destination for Bangladesh, India, Pakistan and Sri Lanka is the US. For Nepal, the US is the second most important export destination after India. The dependence of South Asian countries on the US, in terms of exports, means these nations would gain if the world’s largest economy raises tariffs on goods imported from China and Mexico.