Tariff Flexibility Shields Nations from Economic Crises
In times of economic crisis, countries can legally raise tariffs without breaking rules. The World Trade Organization limits protectionist actions. Researchers studied how much countries can increase tariffs and their actual responses during past crises. They found that there is room for higher tariffs than what countries actually impose, with only modest increases happening recently, around 8 percent. The study predicts similar small tariff hikes during the current economic crisis. This shows that countries have not fully used their available policy options to deal with economic downturns in the past.