Tariffs Add 14 Percent Tax to Cost of Trade

GENEVA, SWITZERLAND – Trade policy barriers such as tariffs and regulations account for at least 14 percent of trade costs according to new estimates from the World Trade Organization (WTO).

The WTO Trade Cost Index launched on April 30 and measures the cost of trading internationally relative to trading domestically, finding that the costs to export are higher for women, smaller businesses, and unskilled workers.

Using estimates of bilateral trade costs for 43 economies and 31 sectors from 2000 to 2018, the WTO Trade Cost Index provides for the first time a detailed breakdown of trade costs for both goods and services and which groups of producers and consumers bear them the most.

Trade policy barriers and regulatory differences — which include tariff and non-tariff barriers — make up the largest component of trade costs when low-income economies trade with each other, the index finds.

Transport and travel costs comprise the largest share of trade costs when high-income economies transact with each other or with lower-income economies.

The index finds that trade costs for services are higher than trade costs for agricultural goods, while trade costs for manufactured goods are the lowest.

Overall, global trade costs have declined by 15 percent between the years 2008 and 2018.
(SOURCE: All Ag News)