- Tariffs disproportionately affect low-income households, women, and small businesses, according to the WTO.
- Countries like the U.S., Canada, and the EU have increased tariffs on Chinese products, particularly on electric vehicles.
- Protectionist policies may lead to higher domestic prices and potential retaliatory measures from trade partners.
Geneva, 9 September (FinanceFlashNews) – Import tariffs tend to have a greater impact on low-income households, according to a new report by the World Trade Organization (WTO). Ngozi Okonjo-Iweala, Director-General of the WTO, emphasized in the report that trade plays a crucial role in reducing poverty and sharing prosperity, contradicting the view that global trade exacerbates inequality.
The WTO report highlights that restrictive trade policies often disproportionately affect low-income families, women, and small businesses, which face increased fixed costs as a result. For example, the U.S. is prepared to quadruple tariffs on electric vehicles imported from China, raising rates to 100%, with Canada following suit. The European Union (EU) has also implemented its own tariffs on Chinese products.
In response, China has launched investigations into imports of dairy products, pork, brandy, and canola from Canada and the EU.
Meanwhile, former President Donald Trump, a current candidate for the 2024 U.S. elections, has proposed a 10% tariff on all imports into the U.S., with even higher rates for Chinese goods.
The WTO’s findings indicate that low-income households bear the brunt of tariffs, as they rely heavily on consumer goods from countries like China. These goods are often exempt from tariffs, benefiting poorer regions in the U.S. In contrast, wealthier households consume a larger share of higher-end products from developed economies.
The report also warns that protectionist policies can backfire, leading to higher domestic prices, which curb consumption and may trigger retaliatory measures. Politically, once tariffs are introduced, they are often difficult to remove, even when they no longer serve the intended purpose of protecting specific industries.
The WTO concluded that protectionism is an expensive method of safeguarding jobs, potentially increasing costs for other sectors and provoking trade disputes with dissatisfied partners.
Keywords: WTO, tariffs, protectionism, China tariffs, low-income households
