Tariff gaps and trade flexibility: What the World Tariff Profiles 2025 reveals about 74% of global commerce - Trade Treasury Payments

The World Trade Organisation (WTO), International Trade Centre (ITC), and UN Trade and Development (UNCTAD) on 7 July 2025 jointly published The World Tariff Profiles 2025 report, which offers a detailed picture of the global tariff landscape across more than 170 economies. The focal point of this year’s edition is “Global trade on most-favoured-nation (MFN) terms”, which reveals that 74% of global trade still operates under MFN principles despite growing preferential arrangements. 

While MFN sounds like special treatment, it represents the opposite. This foundational trade rule emerged from the aftermath of World War II in 1947 when countries sought to prevent repeating the devastating trade wars of the 1930s. The MFN principle operates simply: if a country gives a tariff break to one country, they must extend the same break to all WTO members without favourites or exceptions. 

The MFN principle also appears in Article I of the General Agreement on Tariffs and Trade (GATT), highlighting its fundamental importance to the trading system. This equal treatment principle has functioned as the backbone of global trade for over 75 years, creating predictability for international trade. The World Tariff Profiles 2025 report highlights how each country treats tariff policies across the globe, with a special consideration on MFN. 

Bound tariff vs applied tariffs in developed vs developing countries 

The report provides insightful data on both bound tariffs (the maximum rates countries have committed not to exceed under WTO rules) and applied tariffs (the rates actually imposed on imports). The gap between these rates across economies tells an important story about policy flexibility. For instance, China operates with relatively limited flexibility, maintaining a bound rate of 10.0% against an applied rate of 7.5%, a modest 2.5 percentage point buffer. Brazil, meanwhile, preserves substantial manoeuvrability with a bound rate of 31.4% compared to its applied rate of 13.4%, creating an 18 percentage point cushion. 

This means Brazil can raise its tariffs by up to 18 percentage points during economic downturns without violating WTO commitments and protect domestic industries that China lacks. This flexibility allows Brazilian policymakers to respond to import surges, currency fluctuations, or sectoral challenges without facing WTO disputes or compensation claims from trading partners.

This pattern repeats across developing economies, which typically maintain wider gaps than their developed counterparts, allowing them to adjust tariff levels more readily in response to changing economic conditions. 

Tariffs on agricultural vs. non-agricultural products 

The tariff profiles demonstrate persistent differences in protection levels between agricultural and non-agricultural products. Agricultural products such as dairy, meat, sugar, and cereal products continue to face higher average tariff rates globally compared to non-agricultural products. continue to face higher average tariff rates globally compared to non-agricultural products. The discrepancy is particularly pronounced in developed economies, where agricultural protection remains significantly higher. 

Non-agricultural tariffs have seen greater convergence globally, reflecting decades of industrial tariff liberalisation. 

Canada, for instance, maintains a bound rate of 15.8% for agricultural products but only 5.1% for non-agricultural goods, a difference of 10.7 percentage points. Similarly, China’s bound rates show a 6.6 percentage point difference between agricultural (15.7%) and non-agricultural products (9.1%). Even more striking is Colombia, where agricultural bound rates (92.0%) dramatically exceed those for non-agricultural products (33.5%), reflecting strong protection of domestic farming interests.

These differences reflect the complex political economy of food production, rural constituencies, and food security concerns that continue to shape agricultural trade policy worldwide.

From Hong Kong to Cameroon: A striking difference in regional tariff patterns

The report reveals notable differences in regional tariff patterns that reflect diverse development strategies and historical policy choices. For example, Hong Kong maintains a 0% tariff rate across nearly all categories, standing in sharp contrast to many economies with more protective stances. On the other hand, African economies have diverse tariff structures, often with significant gaps between bound and applied rates. Within Africa, Morocco implements an average applied tariff of 12.3% with full binding coverage (100%), while Cameroon has an applied rate of 17.9% but with minimal binding coverage (0.2%), indicating significant potential for tariff adjustments, which may create uncertainty for exporters. 

In South Asia, Pakistan applies a 9.9% average tariff with binding coverage of 98.9%, indicating its more protectionist approach. South Asian economies generally apply higher bound and applied rates across both agricultural and industrial sectors compared to other regions. In contrast, European economies show relatively low applied rates but maintain select areas of high protection, particularly in agriculture. 

These regional differences reflect not only varying stages of economic development but also fundamental policy choices about how trade policy serves broader development goals.

Technical barriers to trade and sanitary and phytosanitary measures contributing to non-tariff measures

While tariffs remain important, the WTO report highlights how non-tariff measures (NTMs) increasingly determine market access conditions. As traditional tariff barriers have declined through successive trade negotiations, NTMs have become increasingly important determinants of market access.

Technical barriers to trade (TBT) and sanitary and phytosanitary (SPS) measures constitute the most frequently used NTMs. TBT measures include a wide range of regulations and standards that products must meet before entering markets. These include detailed technical specifications for product design and manufacturing, mandatory labelling requirements displaying product information, testing methods to verify safety and quality, and certification procedures confirming regulatory compliance. On the other hand, SPS measures specifically protect human, animal, and plant health from risks associated with food and agricultural imports. These include food safety standards limiting pesticide and additive residues, disease prevention requirements for animal products, pest control measures for plant imports, and processing standards ensuring hygienic production conditions. 

Both these NTMs vary significantly across product groups, with food products, chemicals, and machinery facing the highest incidence. The 20 most frequently affected product categories reveal concentrated regulatory attention in sectors with health, safety, and environmental implications.  

The data shows India leads in the implementation of NTMs with 471 SPS measures and 224 TBT measures, followed by China with 152 SPS and 118 TBT measures. The European Union has also implemented a substantial number of measures, 227 SPS and 75 TBT, reflecting its comprehensive approach to market regulation and regulatory framework. In contrast, smaller economies like Chile have far fewer measures 2 SPS and 7 TBT, indicating less complex regulatory systems or fewer resources for implementation.

These measures often serve legitimate public policy objectives rather than protectionist aims. Nevertheless, their design and implementation have a high influence on trade flows, sometimes creating greater barriers than tariffs themselves.

Global trade on MFN terms at a glance

The special topic of this year’s report examines the current state of trade conducted on most-favoured-nation terms (MFN). The MFN principle requires WTO members to extend the same tariff treatment to all trading partners, preventing discrimination among trading partners. As per the report, approximately 74% of global trade operates on MFN terms as of May 2025.

Several factors influence the MFN trade stats. The first is the administrative complexity, which discourages the use of preferential arrangements, particularly for smaller businesses that struggle with complex rules of origin requirements. When MFN tariffs stand at already low levels, the marginal benefits of preferential access may not justify compliance costs. Additionally, many preferential agreements also exclude sensitive sectors, requiring traders to default to MFN terms for substantial portions of their business. Lastly, the recent geopolitical tensions have further complicated the utilisation of some preferential arrangements.

The report states a wide variation in duty-free access under MFN terms. For example, Canada allows 77.8% of agricultural and 79.2% of non-agricultural imports to enter duty-free, reflecting a generally liberal approach. China provides duty-free access to just 7.0% of agricultural and 10.2% of non-agricultural imports under MFN terms. 

The bottom line

The World Tariff Profiles 2025 portrays the global trade landscape in light of tariffs. While tariff barriers have generally declined, substantial variations persist across economies, sectors, and products. The growing importance of non-tariff measures demands increased attention to regulatory cooperation within international economic governance.

The finding that nearly three-quarters of global trade continues under MFN terms confirms the enduring importance of the multilateral trading system. Despite challenges from geopolitical tensions and preferential agreements, the MFN principle continues to provide essential stability to the global trading environment.

Access the full report here.