The United States is departing from nearly a century of declining tariffs that once made its rates among the world’s lowest. Amid exemptions, pauses, and country-specific rules, how high are the new tariffs facing developing countries?
The United States has recently embarked on a change in its trade policy, departing from nearly a century of gradually decreasing tariffs that had made US rates among the lowest in the world. Moreover, as a leading trading nation and a key development partner, the US provided additional preferential schemes for vulnerable economies to support their development aspirations.
Amid all the policy announcements, exemptions, pauses, and sectoral and country-specificities, how large are the new US tariffs that developing countries face?
Understanding the different components of new US tariffs
The US is substantially increasing its import tariffs for all its trading partners. On 2 April 2025, it announced a universal 10% additional tariff on all imports, effective 5 April, regardless of trade agreements or multilateral commitments under the World Trade Organization (WTO) or unilateral preferential schemes for vulnerable economies (such as the African Growth and Opportunity Act, AGOA or the Caribbean Basin Initiative).
Many developing and least developed countries could face tariffs exceeding 25%. A new country-specific tariff system aimed at cancelling out US trade deficits implies that trade-weighted average rates would increase from an average of 2.8% to over 25% in July 2025, when the current 90-day “pause” expires. For 22 developing countries – including seven least developed countries and three small island developing states – it would surpass 25%.
Tariffs on certain Chinese imports could exceed 100%. New country-specific US tariffs that were announced for many trading partners were supposed to enter into force on 9 April. But their implementation was postponed for 90 days until 7 July 2025. Meanwhile, the US had already imposed an additional 125% tariff on Chinese imports on top of the existing Section 301 tariffs (Title III of the Trade Act of 1974, named "Relief from Unfair Trade Practices"), as well as illicit drug-related and product-specific duties. These tariffs remained in effect until 13 May 2025. After that date, the US and China have lowered the additional tariffs implemented in April 2025. The additional US tariff on Chinese imports was lowered from 125% to 125% to 10%, effective until 13 August, 2025. Subsequently, the average rate dropped from over 100% to 46%.
Members of trade agreements are not spared. For Mexico and Canada – the first and second largest US trading partners, respectively – tariffs under the US-Mexico-Canada Agreement (USMCA) continue to apply.
However, goods that do not meet USMCA rules of origin are subject to additional 25% tariffs under the International Emergency Economic Powers Act (IEEPA), based on the argument that it will help the US to combat illegal border crossings and fentanyl trafficking. Once drug and migration-related tariffs on Canada and Mexico are lifted, non-USMCA compliant goods would face a 12% tariff. Certain non-USMCA-originating products – like potash from both Canada and Mexico, or energy-related goods from Canada – are subject to an additional tariff of 10%, instead of 25%.
The US also expanded its national security tariffs on steel, aluminum and automobiles. A 25% tariff was reinstated on steel, and the tariff on aluminum was raised from 10% to 25% for all countries, including USMCA members.
A new tariff of 25% on automobiles and parts was also announced, citing national security risks under Section 232 of the Trade and Expansion Act of 1962. Automobile and parts that meet the USMCA content rules are exempt from the 25% tariff on their US-made components, provided that the importer certifies the US content and systems are in place to ensure compliance.
Putting all pieces of the tariff puzzle together, trade-weighted average tariffs for Canada and Mexico increase to 8% and 14%, respectively.
Understanding what could happen after the 90-day pause
The least developed countries (LDCs) and developing countries in Asia and Oceania would face the sharpest tariff increases. For LDCs, the trade-weighted average tariff has already more than doubled, rising to 16%, and could increase further to 44%. US tariffs against China have increased to a trade-weighted average of 46%. But even when excluding China, tariffs on developing countries in Asia and Oceania have already risen to 13% and could further increase to 24% after the current 90-day pause.
In relative terms, however, Latin America and the Caribbean have experienced the greatest increase in tariffs. Many of the 20 trade agreements the US has are with developing countries in Latin America, which means they previously benefited from preferential trade terms, with a trade-weighted average tariff of below 0.5%. This has surged to 13%, representing a 42-fold increase. For small island developing states – many of which are in the Caribbean – trade-weighted average tariffs have already increased five-fold from 1.7% to 8.5% and could further increase to almost 10%.
Vulnerable economies are set to pay the highest price for new US tariffs. Some LDCs might face the highest tariff hikes, exceeding those imposed on China following the tariff adjustments as of 14 May 2025.
Dozens of vulnerable economies are expected to lose competitiveness in the US market. Their exports often rely heavily on a narrow range of products and limited number of markets. Higher trade barriers can disrupt these trade flows, making it more difficult for these countries to maintain market access and remain competitive, especially in key sectors like textiles and agriculture.
What should ideally happen?
Sparing the most vulnerable economies from disruptively high tariff burdens should be a priority. These countries contribute minimally to US tariff revenue and only 0.3% to the US trade deficit.
A window of opportunity still exists for policymakers to re-evaluate the planned country-specific tariffs – to safeguard sustainable development and avoid further economic instability.