Washington, DC - American exporters face systematically higher tariffs in the markets of more than 100 U.S. trading partners. This nonreciprocity is evident in small markets from Algeria to Zimbabwe. It is equally evident—with far more damage—in larger markets from China, the European Union and South Korea to India and Vietnam.
The source of the problem is the World Trade Organization’s “most favored nation” rule, which prohibits discrimination among trading partners. Under MFN, a WTO member state must apply the lowest tariffs it applies to the products of any one country to the products of every other country. WTO members may, however, charge higher tariffs if they apply those nonreciprocal tariffs to all countries.