The United Nations Conference on Trade and Development (UNCTAD) has urged the United States to exempt the world’s poorest and smallest nations from reciprocal tariffs that could severely impact their economies. On Monday, UNCTAD released an important report that underscored the essential role of many of our nation’s states in international trade. These countries export agricultural commodities that the U.S. can’t or doesn’t produce.
The U.S. is in the midst of an experimental pause on tariffs. This freeze comes in the form of a 10% universal levy that applies to virtually every country on earth. UNCTAD underscored that 28 of the 57 countries hit by these tariffs are disproportionately vulnerable. These punitive high levies continue to impact their economies severely. Combined, each of these nations makes up less than 0.1% of the U.S. trade deficit. This low impact rules out any major economic backlash for the U.S.
Increasing tariffs on goods imported from these countries would hardly make Washington any money. It would do a lot of damage to foreign economies. For 36 of the 57 trading partners listed, the reciprocal tariffs would generate less than 1% of current U.S. tariff revenues. This raises questions about the efficacy of imposing such tariffs on small economies that struggle to compete in a global market.
UNCTAD highlighted that countries like Côte d’Ivoire and Ghana significantly contribute to U.S. cocoa imports, valued at approximately $800 million and $200 million respectively. According to the agency, many agricultural products sold in the U.S. market are characterized by limited substitutability. This scarcity of alternatives renders their importation essential for American consumers.
“In a report published on Monday, UNCTAD said the ‘current 90-day pause offers an important opportunity to reassess how small and vulnerable economies are treated under the policy of reciprocal tariffs.’” – UNCTAD
The report found that trade concessions from those countries would provide little in the way of benefit for the U.S. These concessions would further reduce their already stressed revenue collection and further stress their economies.
“Increasing tariffs on such goods, while generating some revenue, is likely to result in higher prices for consumers,” – UNCTAD report
As the story develops, Washington policymakers should take note. US negotiators must take into account the long-term effects of such tariffs on the world’s most vulnerable nations. Potential economic harm may exceed short-term benefits realized through higher tariff revenue.
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