Tariffs remain a key tool in trade policy, but developing countries face higher duties that limit their global market access. High import tariffs raise costs for businesses and consumers, potentially curbing growth and competitiveness. Tariff escalation discourages developing economies from exporting value-added goods, hindering industrialization. Understanding tariff trends is crucial for policies that foster economic transformation and sustainable growth.
Developing countries often rely on tariffs as a source of revenue and a policy instrument to support nascent industries. However, they also face higher tariffs on their exports, particularly in sectors like agriculture and labor-intensive manufacturing. This restricts market access and integration into global value chains. Agricultural products face some of the highest tariffs, averaging almost 20 per cent under most-favoured-nation (MFN) treatment, while manufacturing tariffs decreased by approximately 1 percentage point between 2012 and 2023. Textiles and apparel remain subject to some of the highest tariff rates, with import duties averaging close to 6 per cent.
Tariff escalation, where higher tariffs are applied to processed goods than to raw materials, discourages value-added processing in developing countries. This limits opportunities for value addition, job creation, and economic diversification. Tariff peaks, where specific goods face significantly higher tariffs than the general average, also pose challenges. South Asia and Africa show high tariff peaks in agricultural and manufacturing imports.
Developing countries generally impose higher import tariffs than developed nations, while also often facing higher tariffs on their exports. African imports face some of the highest import tariffs, averaging around 8 per cent. South Asia also faces high import tariffs, while Latin America’s imports face lower average tariffs than Africa and South Asia. Regional trade agreements have helped reduce tariffs, and preferential trade remains a key determinant of market access. East Asia has significantly lower tariffs due to extensive trade agreements and deep regional economic integration.
Bound tariffs provide certainty and predictability for exporters, investors, and importers. However, many nations have limited policy space to increase tariffs without violating MFN and RTAs commitments. Tariff escalation presents both opportunities and challenges for developing countries. While it creates barriers for building competitive manufacturing industries, it can also encourage export diversification and regional value chains.
Global trade expanded by nearly US$1.2 trillion in 2024, reaching US$33 trillion. Developing nations, particularly China and India, saw better than average trade expansion, while many developed nations experienced trade contractions. Trade remains stable in early 2025, yet mounting geoeconomic tensions, protectionist policies, and trade disputes signal likely disruptions ahead. The forecast for international trade in 2025 is marked by significant uncertainty, with risk of downturn.
