COVER STORY
A US trade war on Beijing could slow the Chinese economy by 0.7 percent in 2025.
Impact of tariff reductions
approved by the United States in 2000. After completing its initial 15-year period of validity, AGOA was extended in June 2015 by a further 10 years to 2025. Similarly, the European Union’s Everything but Arms (EBA) scheme that was launched in 2001 removes tariffs and quotas for all imports of goods (except arms and ammunition) coming into the EU from all low-income countries. Middle-income countries For middle-income countries, tariff reductions can enhance competitiveness by lowering the cost of imported
inputs and improving access to global supply chains and markets. Given their more diversified economies they are better positioned to take advantage of trade liberalization. Lower tariffs on manufactured goods and services enable them to expand exports, increase investment and integrate further into global supply chains. In addition, many countries have successfully pursued efforts to reduce or offset the impact of tariffs, although past performance is no guarantee of future success (see next page).
Low-income countries The rush by the Trump administration to impose blanket tariffs on a wide range of countries counteracts the positive development effect that reducing tariffs can have. Lower tariffs as offered by developed economies have benefited many low-income countries by improving market access to developed economies for their exports: Sub-Saharan Africa’s trade was boosted enormously by the Clinton administration’s African Growth and Opportunity Act (AGOA),
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