Tariff Reciprocity

James Anderson and Yoto Yotov

No 202526, Working Papers from Center for Global Policy Analysis, LeBow College of Business, Drexel University

Abstract: U.S. President Trump's emphasis on 'tariff reciprocity' has focused public attention on relative height of tariffs as a measure of fairness in trade relations. The import weighted average tariff subsequently used by USTR to rank how protectionist are trading partners is atheoretic and misleading for this purpose. We propose and implement a theory-consistent tariff index that combines thousands of tariff rates into an import volume equivalent uniform tariff. The index: (i) is consistent with the WTO principle that trade relations should aim at reciprocal exchange of market access, and (ii) decomposes neatly into each country's buyer and seller incidence of tariffs.

Keywords: Reciprocal Tariffs; Trade Policy; Gravity Theory; Tariff Incidence (search for similar items in EconPapers)
JEL-codes: F13 F14 F16 (search for similar items in EconPapers)
Pages: 26
Date: 2025-05
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