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The UN Trade and Development reiterated its calls that the poorest and most vulnerable economies be exempt from the US’ reciprocal tariffs
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The tariffs, currently on pause for 90 days, were calculated at rates to balance bilateral merchandise trade deficits between the US and 57 of its trading partners
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In many cases, reciprocal tariffs were seen to devastate developing economies, without significantly reducing US trade deficits or increasing revenue collection, the UNCTAD said in a report
The UN Trade and Development (UNCTAD) reiterated its calls that the poorest and most vulnerable economies be exempt from the US’ reciprocal tariffs.
The tariffs, currently on pause for 90 days, were calculated at rates to balance bilateral merchandise trade deficits between the US and 57 of its trading partners – ranging from 11% for Cameroon to 50% for Lesotho.
The just-released report, entitled “Escalating tariffs: The impact on small and vulnerable economies,” found that in many cases, reciprocal tariffs may devastate developing and least developed economies, without significantly reducing US trade deficits or increasing revenue collection.
UNCTAD pointed out that over the years, a rules-based global trading system has boosted global 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, stated UNCTAD, a sweeping spate of steeper tariffs recently introduced by major economies are raising concerns over escalating trade tensions and their impact on developing countries.
The 57 trading partners concerned – 11 of them least developed countries – contribute minimally to US trade deficits, the UN body said.
For instance, 28 of them each account for less than 0.1% of the deficits yet could still be subject to reciprocal tariffs.
As many of the economies are small, structurally weak, and with low purchasing power, they offer limited export market opportunities for the US.
Said UNCTAD: “Any trade concessions they grant would mean little to the United States, while potentially reducing their own revenue collection.”
If the reciprocal tariffs finally proceed, demands for many imported goods are likely to fall because of higher prices.
Even if US imports were to remain at 2024 levels, additional tariff revenue collected from poorer and smaller economies would be negligible.
For each of 36 of the 57 trading partners, the reciprocal tariffs would generate less than 1% of US current tariff revenues (at approximately $83 billion in 2024).
This means the total contribution of the 36 economies would be roughly $4 billion, or about 5% of what the US collected in custom duties last year.
The report also notes that several countries facing potential reciprocal tariffs export agricultural commodities that the US does not produce, for which there are few substitutes.
Examples include vanilla from Madagascar or cocoa from Côte d’Ivoire and Ghana.
Last year, the US imported vanilla worth approximately $150 million from Madagascar. Cocoa imports from Côte d’Ivoire were close to $800 million, while imports from Ghana were valued at about $200 million.
Increasing tariffs on these goods, despite possibilities to add some revenues, is likely to result in higher prices for consumers, said UNCTAD.
