New York: Europe and the Arabs
The United Nations Conference on Trade and Development (UNCTAD) stated that unilateral economic decisions taken by member states, without going through the World Trade Organization (WTO) or the UN system, can create uncertainty, which could ultimately slow economic growth and harm developing countries in particular. According to the UN Daily News Bulletin, a copy of which we received this morning, the bulletin added that amid escalating trade tensions between major economic powers, tariffs are emerging as a key tool in this tension, raising questions about their nature and impact on the global economy. To answer this question, UN News interviewed Luz Maria de la Mora, Director of UNCTAD's International Trade Division.
De la Mora said that tariffs are not necessarily a problem in and of themselves, but rather the uncertainty they create when used inconsistently with international trade rules.
She noted that tariffs can be a useful tool to protect domestic industries in developing countries, but they must be used with caution to avoid harming consumers and the economy as a whole. She added that developing countries are most vulnerable to the slowdown in global trade, as 95 developing countries rely on their exports.
De la Mora explained that tariffs, defined by the United Nations as "customs duties on imports of goods, imposed either as a percentage of the value or on a specific basis," can be used to achieve various objectives, such as protecting domestic industries and increasing government revenue.
Developed countries often use tariffs as part of broader economic policies aimed at protecting specific industries or responding to international trade dynamics. In contrast, developing countries may use tariffs more broadly to protect emerging industries and support economic development.
De la Mora said, "Developing countries tend to have higher levels of protection, and there are several reasons for this. One is that you may want to develop a particular industry in the automotive or chemical sector. One way to help an industry develop and grow is to protect it, through tariffs, from foreign competition. The downside is that producing those goods for the domestic market is more expensive, and it can also discourage competition." NAFTA: An Example of the Mixed Impact of Tariffs
De la Mora cited the North American Free Trade Agreement (NAFTA)—between the United States, Canada, and Mexico—as an example of the mixed impact of tariffs.
She said that NAFTA, the first free trade agreement between developing and developed countries, eliminated almost all tariffs between the three countries, contributing to the transformation of the Mexican economy and the creation of new jobs.
De la Mora continued, “In Mexico, for example, there were many support programs in the agricultural sector to help producers face competition from the United States and Canada. They also began producing more fruits and vegetables, which were not present in Mexico before, and today the country is the leading exporter of tomatoes, avocados, berries, and some other fresh produce to the United States. This has helped American consumers to eat a more balanced and healthier diet. In turn, Mexico benefits from easier access to grains, wheat, corn, sorghum, and also some types of beef, pork, and poultry.” However, de la Mora noted that NAFTA also led to job losses in certain sectors and emphasized the importance of trade policies that go hand in hand with policies that ensure the training of workers who lose their jobs.
De la Mora called on countries to adhere to international trade rules and cooperate through the World Trade Organization to resolve trade disputes. She warned that the continued use of tariffs as a tool of political pressure would have dire consequences for the global economy.
She emphasized the importance of multilateralism in the international trading system and said that developing countries need an effective international trading system that provides certainty, with clear regulations, and where rules are not changed without notice, without negotiations, or without any advance warning of what is coming.
Tariffs in Brief:
The United Nations defines tariffs as "customs duties on the import of goods, imposed either as a percentage of the ad valorem or on a specific basis (such as $7 per 100 kilograms)."
Tariffs can be used to create a price advantage for similar goods produced domestically and to increase government revenue.
Developed countries often use tariffs as part of broader economic policies aimed at protecting specific industries or responding to international trade dynamics. In contrast, developing countries may use tariffs more broadly to protect emerging industries and support economic development.
Developed countries are more likely to engage in complex international trade agreements that include tariff reductions and other trade facilitation measures. Developing countries may have fewer such agreements and may use tariffs as a tool to negotiate better terms.