Global Trade Update Plus: Tariff Upgrades: Impact on Small Vulnerable Economies

Policy Insights Escalating tariffs: the impact onsmall and vulnerable economies In recent months, the UnitedStates has introducedtrade measures that havetransformed the current tradelandscape. This edition of theGlobal Trade Update providesa timeline of the trade policydecisions by the UnitedStates administration that areshaping this new landscape Global tradeUpdatePolicy insights Reciprocal tariffs - United States In recent months the United States Executive has imposed import tariffs at or above 10 per centto imports from all over the world, justified by existing United States laws. Some of the legislation TheInternational Emergency Economic Powers Act(IEEPA) grants the Presidentbroad authority to regulate various economic transactions following a declaration of anational emergency. Under IEEPA, the United States Executive can implement tariffs in Section 232of the Trade Expansion Act of 1962 allows the President to impose tariffson imports deemed a threat to national security. Tariff levels are determined after a Section 301of the Trade Act of 1974 grants the Executive the authority to enforce tradeagreements, solve trade conflicts, and increase access to foreign markets for UnitedStates goods and services. It is the main legislation the United States uses to impose Section 604of the Trade Act of 1974 enables the Executive to impose duties orrestrictions on imports. This section has been used to implement “reciprocal tariffs” on Timeline of implementation of January 20, 2025:America First Trade Policy The United States administration issued its America First Trade Policy (AFTP) which prioritizesU.S.’ economic interests, national security, and industrial competitiveness by reducing its trade This policy carries costly implications for small and vulnerable economies and Least DevelopedCountries in terms of their participation in international trade, and access to the United States Following the AFTP, the United States Executive has introduced new tariffs across the board, as February 13, 2025:Fair and Reciprocal Plan The Presidential Memorandum on “Reciprocal Trade and Tariffs” introduced the “Fair andReciprocal Plan,” which seeks to determine the equivalent of a reciprocal tariff for each tradingpartner. The Plan outlined a country-specific approach to “reciprocal tariffs,” moving away from The Memorandum called for a review of the “non-reciprocal trading relationships” with all UnitedStates trading partners. This review includes examining tariffs that United States products face The United States administration reinstated Section 232 tariffs on all steel imports and increasedthe aluminum tariff from 10 to 25 per cent, with no exceptions. Argentina, Australia, Brazil,Canada, Japan, Mexico, the Republic of Korea, the European Union, Ukraine, and the United Section 232 tariffs of 25 per cent on steel and aluminum will not be subject to additional March 24, 2025:tariffs related to Venezuelan oil Under the IEEPA and the Section 301 of the United States Trade Act of 1974, the Executiveannounced a 25 per cent tariff on imports from countries that import Venezuelan oil. The UnitedStates may impose this 25 per cent tariff on all goods imported from any country that importsVenezuelan oil, either directly or indirectly. These duties will be in addition to any tariffs already April 2, 2025:announcement of reciprocal tariffs worldwide Under the IEEPA, the National Emergencies Act, Section 301 and Section 604 both of the TradeAct of 1974, the United States declared a national emergency due to the growing goods tradedeficit, identifying the rebalancing of trade flows as a primary policy goal. This rebalancing would The Executive Order includes a unique exception for articles that contain at least 20 per centUnited States content by value, which is defined as: “the value of an article attributable tocomponents produced entirely, or substantially transformed in the United States.” If an articlecontains 20 per cent or more United States content, reciprocal tariffs will only apply to the The policy does not provide an end date for the tariffs imposed under this Executive Order.Additional tariffs will remain in place until the United States administration decides that “the threatposed by the trade deficit and underlying nonreciprocal treatment has been satisfied, resolved,or mitigated.” The United States administration may adjust the tariff rates depending on actions April 3, 2025:automobiles and auto parts All automobiles and auto parts (starting May 3, 2025) are subject to 25 per cent duties basedon Section 232 (Proclamation 10908 of March 26, 2025 Adjusting Imports of Automobiles and For automobiles from Mexico and Canada, the United States content will be duty free, and thatvalue will be deducted from the 25 per cent tariff to be paid. Therefore, autos from Canada and April 5, 2025:additional 10 per cent reciprocal tariffs become effective A 10 per cent additional ad valorem duty to United