Donald Trump has instructed his team to develop proposals for implementing a new series of tariffs on products entering the United States.
He aims to establish “reciprocal tariffs,” which would involve levying taxes on imports to the US that mirror the rates imposed by other nations on American exports.
The president contends that many countries impose higher tariffs on US goods compared to those they face in return, asserting that America has been “treated unfairly by trading partners, both allies and adversaries.”
BBC Verify has investigated the legitimacy of his claims.
Countries establish tariffs on imports through a structured process that adheres to global trade regulations.
As members of the World Trade Organization (WTO), nations have the authority to implement tariffs on imported goods. The rates of these tariffs can vary based on the specific product being imported. For example, a country may impose a 10% tariff on rice while applying a 25% tariff on automobiles.
However, WTO regulations stipulate that countries must not discriminate among trading partners when determining tariffs for a specific imported item. For instance, Egypt cannot impose a 2% tariff on wheat imported from Russia while levying a 50% tariff on wheat from Ukraine. This principle is known as “Most Favoured Nation” (MFN) treatment in international trade, which mandates that all countries must be subject to the same tariff rates imposed by a given nation.
An exception to this rule occurs when two countries enter into a free trade agreement that encompasses the majority of their trade. In such cases, they may eliminate tariffs on goods exchanged between them while still applying tariffs on imports from other countries.
What are the current tariff rates imposed by various countries?
Most nations maintain a variety of tariff rates applicable to different categories of imported goods. Additionally, they provide an average external tariff to the World Trade Organization (WTO), which indicates the overall average tariff rate levied on all imports.
In 2023, the United States reported an average external tariff of 3.3%.
This figure is marginally lower than the United Kingdom’s average tariff of 3.8%.
It also falls below the European Union’s average tariff of 5% and China’s average tariff of 7.5%.
The average tariff in the United States is significantly lower than that of several other trading partners.
For example, India’s average tariff stands at 17%, while South Korea’s is 13.4%.
Moreover, the average tariff in the United States is less than that of Mexico (6.8%) and Canada (3.8%). However, trade agreements between the United States and these nations ensure that American exports to them are exempt from tariffs. The same applies to South Korea, with which the United States has established a free trade agreement.
In a broader context, it is valid for Trump to highlight that certain countries impose higher average tariffs on imports compared to the United States.
These tariffs increase the cost of many American exports to those nations, potentially placing U.S. exporters at a disadvantage compared to exporters from those countries who sell their products in the United States.