By: Julien Chaisse and Debashis Chakraborty
PDF: Tariffs and Threats in US Trade Policy
In June 2020, the United States pushed for a “reset” of tariffs at the World Trade Organization (WTO). This move was heralded as necessary for the United States to level the uneven playing field caused by “high bound tariff rates.” Ordinarily, the United States perceives trade remedies as a defensive measure. However, in this context, the United States seems to be preemptively acting against any misapplied, anti-dumping duties that it may face. For this reason, a global reset of tariffs will likely find support. It can be counterproductive for the new US administration to pursue such a strategy. If realized, it could result in countries pursuing trade remedies such as anti-dumping duties, which could adversely affect US exporters. In the long term, this could cause a fundamental shift in US trade remedy politics.
This Article will argue that citing “high bound tariff rates” to call for a reset of tariffs is un- sound. A WTO member can legally impose bound rates, which represent maximum rates. The ground reality remains that most countries apply tariffs that are lower than their bound rates in line with their multilateral commitments. While examining the rationale for different tariff policies, this Article will show that a tariff reset will adversely affect both US interests and established multilateral systems.