Tariffs – a border tax on imported goods – are an important trade policy tool. They serve as a mechanism to protect domestic industries and generate government revenue.
The creation of a rules-based global trading system has contributed to a gradual, steady decline in tariffs, helping to boost international trade. In 2023, about two thirds of global trade was tariff-free. But for the remaining third, tariff levels are still high and disproportionately affect developing economies.
High import duties can increase costs for businesses and consumers, potentially stifling economic growth and competitiveness. Policymakers must strike a balance between leveraging tariffs for economic development and integrating into the global economy through trade liberalization.