Already grappling with low growth and mounting uncertainty, weaker and smaller economies, whose activities have a negligible effect on trade deficits, should be exempt from new tariff hikes.
Over the years, a rules-based global trading system has boosted international commerce and contributed to a gradual, steady decline in tariffs — a tax that countries levy on imported goods. In 2023, about two thirds of world trade occurred without tariffs.
In contrast, a sweeping spate of steeper tariffs recently introduced by major economies are raising concerns over escalating trade tensions and their impact on developing countries.
In a new report released on 14 April, UN Trade and Development (UNCTAD) is amping up calls that the poorest and most vulnerable economies be exempt from “reciprocal tariffs”.
Such tariffs, currently on pause for 90 days, were calculated at rates to balance bilateral merchandise trade deficits between the United States and 57 of its trading partners – ranging from 11% for Cameroon to 50% for Lesotho.
The report, entitled “Escalating tariffs: The impact on small and vulnerable economies”, finds that in many cases, reciprocal tariffs risk devastating developing and least developed economies, without significantly reducing US trade deficits or increasing revenue collection. More
