WTO: Tariffs Disproportionately Impact Low-Income Households
Source: DairyNews.today
A new report from the World Trade Organization (WTO) reveals that import tariffs tend to hit low-income households the hardest, amplifying concerns over rising protectionism and the shift away from open markets. As reported by Reuters, the 2024 World Trade Report counters prevailing narratives that trade contributes to global inequality, emphasizing instead its role in poverty reduction and prosperity sharing.
WTO Director-General Ngozi Okonjo-Iweala stated that the report reaffirms the positive impact of trade, pushing back against the "currently fashionable notion" that it exacerbates inequality. According to the report, restrictive trade policies disproportionately affect vulnerable groups, including low-income households, women, and smaller companies that struggle with the increased fixed costs of trade barriers.
The issue of rising tariffs is particularly acute in major economies. The United States is set to impose higher tariffs on a range of Chinese imports, including a significant increase in duties on electric vehicles (EVs). Canada has mirrored these hikes on EVs, while the European Union has introduced its own tariffs in response. China, in turn, has launched investigations into imports of EU dairy, pork, and brandy products, as well as canola from Canada.
In the U.S., former President and current presidential candidate Donald Trump has proposed a 10% tariff on all imports, with even higher rates targeted at China. The WTO report highlights that such protectionist measures can disproportionately burden low-income households, who tend to purchase more goods from low-cost producers like China. In contrast, wealthier households consume a larger share of goods imported from high-income economies, which are less impacted by tariffs.
Protectionist policies, the report suggests, can backfire by driving up domestic prices, thereby reducing consumption and hurting the broader economy. Moreover, they often invite retaliatory measures from trading partners, escalating trade tensions. Even when these policies are no longer needed to protect specific sectors, they can be politically challenging to roll back, locking in higher costs for consumers.
The WTO report ultimately concludes that protectionism is not an effective strategy for promoting inclusiveness. Rather, it is a costly approach that may safeguard certain jobs but raises prices for other sectors and risks damaging retaliation from international trading partners.
The issue of rising tariffs is particularly acute in major economies. The United States is set to impose higher tariffs on a range of Chinese imports, including a significant increase in duties on electric vehicles (EVs). Canada has mirrored these hikes on EVs, while the European Union has introduced its own tariffs in response. China, in turn, has launched investigations into imports of EU dairy, pork, and brandy products, as well as canola from Canada.
In the U.S., former President and current presidential candidate Donald Trump has proposed a 10% tariff on all imports, with even higher rates targeted at China. The WTO report highlights that such protectionist measures can disproportionately burden low-income households, who tend to purchase more goods from low-cost producers like China. In contrast, wealthier households consume a larger share of goods imported from high-income economies, which are less impacted by tariffs.
Protectionist policies, the report suggests, can backfire by driving up domestic prices, thereby reducing consumption and hurting the broader economy. Moreover, they often invite retaliatory measures from trading partners, escalating trade tensions. Even when these policies are no longer needed to protect specific sectors, they can be politically challenging to roll back, locking in higher costs for consumers.
The WTO report ultimately concludes that protectionism is not an effective strategy for promoting inclusiveness. Rather, it is a costly approach that may safeguard certain jobs but raises prices for other sectors and risks damaging retaliation from international trading partners.
23.09.2024
Carbon emissions in global milk production - the elephant in the room
I have been thinking to make this post yes/ no. I decided for yes and like to ask everyone to not "shoot the messenger". The chart shows an analysis of IFCN Dairy Research Network from the 2024 supporter conference in Poland.
