The recent wave of tariff reductions on U.S. exports could carry broader global implications than previously appreciated, according to a note from JPMorgan economists published Monday. While the direct boost to U.S. growth is expected to be modest, the real impact may lie in how global trade rules distribute those benefits more widely.
Under the World Trade Organization’s Most Favored Nation (MFN) principle, any tariff cut extended to one country must be offered to all MFN trading partners. That means countries reducing tariffs on U.S. goods are also obliged to lower those same tariffs for many other nations, including emerging markets.
“This is the unintended silver lining of the trade deals,” the economists wrote, noting that the spillover effects could significantly benefit third countries. For instance, a country that lowers tariffs on U.S. agricultural imports could end up boosting agricultural exports from other MFN nations even more than from the U.S. itself — a distributional impact not yet fully priced in by markets or models, they said.
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