TWN Info Service on WTO and Trade Issues (Feb26/16)
18 February 2026
Third World Network

UN: Who are the winners and losers when trade policies shift?
Published in SUNS #10382 dated 16 February 2026

Penang, 13 Feb (Kanaga Raja) — Shifts in trade policy are increasingly reshaping global export competition, as when governments adjust tariffs, preferences, and other trade costs, they alter prices and competitive conditions, according to UN Trade and Development (UNCTAD).

In the latest edition of its Global Trade Update, UNCTAD said that these changes can quickly reorder which countries gain or lose ground in international markets, influencing sourcing patterns and the direction of global trade flows.

It showcased how these shifts play out in practice in light of recent United States trade measures, pointing to a more restrictive and uneven trade landscape – with clear losses for some exporters, but new opportunities for others.

According to the report, changes in trade policy generate distributional effects both within economies and across foreign suppliers.

“Measures such as regional trade agreements, preferential schemes, tariff adjustments, and localized trade cost frictions modify demand conditions and relative prices in domestic and international markets.”

These shifts affect the competitive positions of countries and firms, influencing their ability to compete with domestic producers and with other foreign suppliers, it said.

As a result, trade policy changes can reallocate market shares not only between domestic and foreign firms, but also among foreign producers and exporters.

The report said over time, these developments shape production, sourcing decisions, and the configuration of global value chains, influencing broader patterns of trade and investment.

It said in the context of recent United States trade measures, the scale and direction of tariff changes have had measurable implications for exporters’ competitiveness in accessing the United States market. The effects have been uneven, as suppliers have moved from largely uniform tariff treatment to sharply differentiated tariff levels depending on the origin.

For instance, the report said that as of early 2026, United States imports of South African wine are roughly 17 percentage points more expensive relative to other wine-exporting countries than they were in 2024.

For rice, United States imports from Italy have become, on average, about 12 percentage points cheaper than rice imported from other suppliers.

Although product quality and variety continue to influence sourcing decisions, these relative tariff differences are likely to shape procurement strategies and may gradually shift trade flows, the report suggested.

NEW REALITIES

In 2024, access to the United States market was primarily governed by World Trade Organization (WTO) most favoured nation (MFN) rules, under which most trading partners faced similar tariff rates, said the report.

“Exceptions applied to trade conducted under preferential arrangements, including free trade agreements and unilateral preference schemes, which provide duty-free access for eligible products from beneficiary countries.”

Overall, the report said, nearly two-thirds of United States imports entered under MFN tariff rates in 2024. Since then, average applied tariffs increased by nearly 15 percentage points, and by early 2026, only about 20 per cent of United States imports were subject to MFN or duty-free rates.

According to UNCTAD, this marked a shift toward a more differentiated tariff structure shaped by reciprocal measures, bilateral arrangements, sector-specific policies, and targeted exemptions for goods not produced or cultivated domestically.

Tariffs rose across all major sectors; however, both the magnitude of the increases and the degree of variation across suppliers – the dispersion – differed significantly, the report stated.

For example, it said that tariffs on iron and steel have increased substantially but in a relatively uniform manner across suppliers, resulting in limited dispersion.

On the other hand, average tariffs on chemicals rose only moderately, yet the variation across exporters widened considerably, creating more pronounced differences in competitive conditions among suppliers.

The report pointed out that the international effects of United States tariff adjustments depend on several factors, including the magnitude of the tariff change, the relative importance of the United States market in global trade for the products concerned, and how sensitive importers and consumers are to price changes.

To gauge the sectoral exposure, UNCTAD examined the average change in global tariffs associated with United States tariff adjustments.

For instance, it said although the United States is a significant market for coffee, tea, and spices, tariffs in these categories have changed little, likely reflecting limited domestic production alternatives and suggesting relatively modest global impacts.

“While tariff increases have been higher for cereals, the United States represents only a small share of global cereal imports, so global effects have been limited.”

However, it said the automotive and transport equipment sector exhibits greater sensitivity to United States tariff changes: the United States accounts for nearly 20 per cent of global imports in this sector, and its average tariff has increased by almost 20 percentage points, indicating the potential for significant global repercussions.

IMPLICATIONS FOR SOUTH

Recent tariff increases in the United States have varying implications across trading partners, reflecting both the scale of the tariff adjustments and the extent to which individual economies depend on the United States market, said the report.

Grouping countries into three broad categories, namely, developed economies, developing economies, and least developed countries (LDCs), UNCTAD said that on average, developed economies appear less exposed to recent United States tariff changes.

It said they tend to face smaller tariff increases and ship a relatively limited share of their exports to the United States, while their diversified export structures and relatively modest tariff adjustments help moderate the overall impact.

However, the report said developing economies show higher levels of exposure. They generally face larger tariff increases and export a higher proportion of their goods to the United States.

As a result, the report said changes in United States tariff policy may have more noticeable effects on their price competitiveness and export performance.

Meanwhile, it said that the LDCs exhibit a distinct pattern of exposure. Although the United States represents a smaller share of their total exports, LDCs face some of the steepest tariff increases, even though many benefit from preferential access under the African Growth and Opportunity Act (AGOA) program.

While their lower export shares reduce direct exposure, the magnitude of the tariff changes, combined with their typically narrow export bases and limited capacity to reorient trade, may still lead to significant effects, it said.

Furthermore, the report said a closer look beyond averages shows that recent United States tariff changes are highly uneven across economies, even within the same country groups.

“Some economies have experienced substantial increases in the tariffs applied to their exports, while others have seen relatively small adjustments.”

According to the report, approximately 37 economies, mostly developing economies, including 10 LDCs, have faced an average tariff increase of less than 5 percentage points. By contrast, the largest number of economies fall within the 5-15 percentage points range.

It said a significant group of economies, predominantly developing economies, along with several developed economies and four LDCs, have experienced average tariff increases exceeding 20 percentage points. For two LDCs, the increase exceeded 35 percentage points.

Such large adjustments can considerably reduce the price competitiveness of affected exporters in the United States market, the report emphasized.

Overall, it said the wide dispersion in tariff changes indicates that recent United States trade policy adjustments have had diverse effects across economies.

“This heterogeneity reflects differences in sector-specific tariff changes, the structure of country-specific tariff schedules under United States trade policy, and variations in trading partners’ export baskets. As a result, the global effects of the tariff increases are unevenly distributed, with some economies facing significantly greater adjustment challenges than others.”

Differentiated tariff structures tend to produce uneven market access conditions among trading partners, the report observed.

Even when tariff levels increase across all suppliers, non-uniform tariff adjustments can alter relative costs and generate both gains and losses for exporters, it said.

“For many products, domestic production cannot rapidly substitute for all imported inputs or final goods, so imports continue but may shift toward suppliers facing smaller tariff increases,” it said, pointing out that such changes in sourcing patterns are consistent with well-documented trade diversion effects.

On average, the changes in relative competitiveness associated with recent United States tariff measures appear to favour suppliers from developed economies, it stressed.

“The uneven application of tariff increases changes cost structures for United States importers, incentivizing a shift toward exporters that face comparatively lower duties.”

Prior to the latest measures, exporters from developed economies had an average tariff advantage of roughly 1.5 percentage points in the United States market, and this margin has increased by about 2 percentage points.

On the other hand, developing economies have experienced a widening of their relative tariff disadvantage, from approximately one percentage point to nearly three.

Least developed countries, previously in a broadly neutral position, now face an estimated relative disadvantage of about two percentage points, said the report, adding however that LDCs’ disadvantage in tariff treatment has been mitigated by the recent renewal of AGOA.

These changes do not imply that imports from developing economies or least developed countries will stop, the report said. However, higher relative tariffs increase costs and may reduce the competitiveness of their exports.

This can raise the likelihood that United States importers adjust sourcing toward suppliers facing lower duties, potentially reinforcing existing structural challenges related to market access and competitiveness, it added.

WINNERS & LOSERS

For many trading partners, the recent United States tariff measures are expected to alter relative competitiveness in the United States market, the report said.

In several product categories, tariffs have increased more sharply for some large emerging economies, including Brazil, China and South Africa, resulting in comparatively smaller increases for other suppliers.

In such cases, exporters facing relatively lower tariff adjustments may experience improved cost competitiveness.

The analysis of relative preferential margins, which measure how much better or worse a country’s exports are treated tariff-wise relative to its competitors, indicates that approximately three-quarters of United States trading partners could see some degree of improvement in their relative tariff position, while roughly one-quarter may experience a decline, the report suggested.

Looking beyond averages, it said the change in relative competitiveness in accessing the United States market varies widely, even among countries within the same group.

Most economies seeing a deterioration are developing economies and LDCs, while a few developed economies may also be affected. In many instances, the change in relative competitiveness is modest – below 5 percentage points – though some economies, including a few LDCs, experience more pronounced shifts.

Overall, the report said that these developments illustrate how differentiated tariff changes can generate varied impacts across and within country groups, influencing exporters’ relative positions in the United States market depending on the sectoral composition and magnitude of tariff adjustments.

As a result of the United States tariff increases, changes in relative competitiveness in the United States market vary widely across both sectors and country groups, it added.

Developed economies generally maintain strong competitive positions, with improved preferential margins in most sectors, although competitiveness has declined slightly in a few areas, such as base metals and fuels.

On the other hand, UNCTAD said developing economies tend to face greater relative disadvantages, with notable losses in competitiveness across several sectors, including cereals, oilseeds, machinery and plastics.

Notably, LDCs display the most diverse outcomes: they gain competitiveness in resource-based sectors and many agricultural products, but lose ground in a range of manufactured goods.

While it is still too early to quantify the full trade effects of these tariff changes, the implications for suppliers to the United States market are clear, UNCTAD pointed out.

In several sectors, tariffs are likely to prompt shifts in sourcing across countries. For example, machinery and textiles may see substantial changes in sourcing patterns, largely favouring exporters from developed economies.

The report suggested that when United States importers have strong incentives to reallocate sourcing toward countries facing lower relative tariffs, trade diversion can occur, even in product lines where a country had minimal or no previous exports to the United States.

In practical terms, UNCTAD said that large and uneven tariff shifts can allow countries to gain a foothold in the United States market for products they already export successfully to the rest of the world, but where they were previously priced out relative to other foreign suppliers.

“These opportunities can be particularly significant in sectors where tariff differences become wide enough to offset logistical or scale disadvantages.”

More importantly, the report said LDCs can benefit in cases where tariff hikes disproportionately affect their competitors – particularly in agricultural products, resource-based industries, and some low-tech manufacturing sectors – thanks in part to the advantages provided by the AGOA scheme to some of them.

While these openings may be narrow or product-specific, they nonetheless represent real prospects for export diversification and upgrading, it suggested.

One important aspect of tariff changes is tariff escalation: the pattern in which raw materials typically face low tariffs, intermediate goods moderate tariffs, and processed products face higher tariffs, UNCTAD noted.

Non-uniform changes in the tariff structure can either reduce or exacerbate this escalation. In the latter case, it can become more difficult for raw-material exporters to move into higher-value segments of a value chain, as relatively higher tariffs on processed goods provide incentives to locate production closer to consumers, it said.

The report highlighted United States tariff changes along the cocoa-chocolate value chain to illustrate this latter scenario.

It said raw cocoa beans typically enter the United States duty-free, while chocolate products face higher tariffs.

Under recent United States tariff changes, duties on cocoa beans remain unchanged, but tariffs on chocolate have increased significantly, and not all exporters have been affected equally.

Countries that are already major suppliers of chocolate to the United States, such as Canada, Mexico, Belgium, and Switzerland, have faced smaller tariff increases than many cocoa-producing countries.

As a result, while exporting raw cocoa remains viable for producers such as Cote d’Ivoire, Ecuador, Ghana, or Indonesia, upgrading into chocolate exports to the United States has become even more difficult, reinforcing existing patterns of specialization and limiting opportunities for value addition, the report underlined.

Changes in trade policy affect not only a foreign supplier’s market access conditions but also those faced by its competitors, shaping relative competitiveness among trading partners, it stressed.

As a result, trade policy shifts reallocate market shares, influence production and supply decisions, and transform global trade and investment patterns.

According to the report, in the case of recent United States tariff changes, the magnitude and direction of these changes have had significant repercussions among foreign suppliers’ competitiveness in accessing the United States market.

The report suggested that in the context of shifting trade policies, policy efforts should explore opportunities to diversify export markets when relative market access becomes more restrictive, while also taking advantage of newly improved preferential positions. +