| Imports from U.K., 2021 | $56.6 billion |
| Imports from Pakistan, 2021 | $5.3 billion |
| Tariffs on U.K. goods, 2021 | $566 million |
| Tariffs on Pakistani goods, 2021 | $523 million |
Looking at the U.S. tariff system as domestic tax policy for an International Trade Commission hearing last week, PPI’s Ed Gresser found much to dislike. In this role, it turns out to be mainly a way to tax cheap clothes, shoes, and other consumer goods, many of them not made in the United States for decades. As such, it is a remarkably regressive way to raise money, and not obviously effective as a job or production protector.
How does it look from the other side of the border? The complicated answer is, it basically depends where you are on the other side. For most countries U.S. tariffs turn out to be pretty modest, in a range from close to zero to about 5%. For low-income Asian countries reliant on clothing and textile exports, it is very restrictive; for China and to some extent for the world, it has changed a lot since 2017. As a starting point, a quick list (using trade-weighted averages, i.e., tariff payments divided by the value of goods imports) illustrates the world averages of 2017 and 2021, and the variation among countries:
| Bangladesh | 14.7% |
| China, 2021 | 11.3% |
| Sri Lanka | 10.9% |
| Pakistan | 9.8% |
| Cambodia | 8.3% |
| Vietnam | 4.8% |
| Indonesia | 4.5% |
| World, 2021 | 3.0% |
| Ukraine | 2.8% |
| China, 2017 | 2.7% |
| Thailand | 1.9% |
| Egypt | 1.7% |
| Samoa | 1.5% |
| Japan | 1.5% |
| World, 2017 | 1.4% |
| Brazil | 1.0% |
| Philippines | 1.5% |
| Germany | 1.4% |
| European Union, 2021 | 1.4% |
| European Union, 2017 | 1.3% |
| El Salvador | 1.2% |
| United Kingdom | 1.0% |
| Argentina | 0.9% |
| New Zealand | 0.7% |
| Lebanon | 0.6% |
| Uzbekistan | 0.6% |
| Norway | 0.5% |
| Haiti | 0.4% |
| Jordan | 0.3% |
| Kenya | 0.3% |
| Ghana | 0.2% |
| Kuwait | 0.2% |
| Fiji | 0.2% |
| South Korea | 0.2% |
| Jamaica | 0.1% |
| Canada | 0.1% |
| Colombia | 0.1% |
| Liberia | 0.01% |
What explains these patterns?
High tariffs on low-income Asia: The low-income Asian countries at the top of the list — Bangladesh, Cambodia, Pakistan, and Sri Lanka — specialize in exports of clothing and home textiles. Tariffs on these goods average over 11%, and spike to 32% (as one example, for polyester shirts). By comparison, IT goods, medical equipment, natural resources like oil and fish, and primary agricultural commodities are zero, while heavy-industry and sophisticated consumer goods generally get low tariffs. Thus the startling fact that buyers of Pakistan’s modest $5.3 billion worth of shirts, towels, and similar goods pay almost as much as buyers of $56.6 billion in British medicines, aircraft parts, automobiles, and art auction prizes. Likewise, buyers of struggling Sri Lanka’s underwear and clothing paid $325 million last year; the bill for buyers of Norway’s $6.7 billion in salmon, oil, and pharmaceuticals was $34 million, an order of magnitude smaller.
Low-to-medium rate on others: If the highest rates show up in low-income Asia, the lowest are for countries of several different types: (a) energy and natural resource exporters (oil for Kuwait, fish for Fiji, and so on); (b) the 20 U.S. FTA partners, where Canada, Jordan, El Salvador and Colombia stand in for the larger group; and (c) countries enrolled in the African Growth and Opportunity Act or the Caribbean Basin Initiative, such as Kenya, South Africa, Liberia, Haiti, and Jamaica. Larger wealthy and middle-income countries (the U.K., Germany, Brazil, Argentina, Thailand, Japan, etc) have diversified export mixes, typically with a lot of zero-tariff products, a lot of mid-tariff products, and some high-tariff goods, and typically wind up in a range from 1% to 3%.
Changing rates for the world and China: Finally, the system has changed substantially over the last five years, with the worldwide average rate doubling from 1.4% in 2017 to 3.0% in 2021. This is principally due to the Trump administration’s “301” tariffs on Chinese goods. The “232” tariffs on steel and aluminum, though equally controversial, affect only about 1.5% of imports, and changed overall averages only very modestly for the world or large partners like the EU or Japan. For Chinese goods specifically, average rates have jumped from 2.7% in 2017 to 11.3% in 2021 – very high in comparison to the vast majority of countries, but still actually below the normal, permanent rates for products from Bangladesh.
Gresser on the tariff system and American underserved and underrepresented communities.
A long view: The U.S. International Trade Commission tracks U.S. tariff rates from the McKinley Tariff of 1890 to 2020.
… and analyzes the 11,414 U.S. tariff lines — How many are zero? How many duty-free under FTAs and preferences? How many are “specific duties,” or flat fees, instead of percentages? — etc.
The U.S. tariff system.
International comparisons
The World Bank’s interactive table of average tariff rates worldwide and by country uses “simple averages” (the rates for each single tariff line in a country’s “schedule” added up, then divided by the total number of tariff lines) rather than the “trade-weighted” averages above. This approach has grown less useful as a gauge generally (as more countries use FTAs and other special programs), and especially for the U.S. since the 301 and 232 tariffs.
This noted, the table reports a worldwide average of 5.2% as of 2017, down by about 2/3 from the 15.6% average of 1993, and by about half from the 10.8 percent world average of 2000. The world’s highest rate is the Bahamas’ 23.7%, with a few other small islands and countries (the Cayman Islands, Bermuda, and Djibouti) next. The lowest are the zeroes for Hong Kong and Macao, with very slightly higher 0.1% averages in Brunei and Singapore.
The WTO’s World Tariff Profiles 2021 has a much more detailed look, with simple averages, trade-weighted averages, “tariff peak” counts, ag vs. non-ag., and more for 151 countries.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
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