On the surface, the regional tariffs Bessent floated may sound somewhat arbitrary, since the administration has broadly said each trade deal would be bespoke.
So, shifting to a system where countries are grouped together under blanket tariff policies risks, in some cases, throwing out the baby with the bathwater for countries whose trade practices are less disturbing to the administration.
But there is an important practicality element to it, said Keith Rockwell, a former director at the World Trade Organization who is now a senior research fellow at the Hinrich Foundation.
As it stands, there’s a highly complex classification system the United States uses to assign tariff rates to specific products. The classification system is so granular that there are over 17,000 unique tariff product codes. If every country the US trades with has its own unique tariff rate in addition to the product rates, there would be millions of tariff combinations, he said.
That’s why the WTO has what’s known as “Most-Favored Nation” tariff rates for its 166 member countries, which essentially is a ceiling of mutually agreed-upon import taxes, though those can vary by sector. “There’s a reason why you negotiate things on a Most-Favored Nation basis: it’s just a heck of a lot easier,” Rockwell told CNN.
Furthermore, that is why countries are often drawn to entering regional trade agreements that can simplify and lower tariff rates. Some examples involving the US include, the United-States-Mexico-Canada Agreement and the Dominican Republic–Central America Free Trade Agreement.
But grouping countries together poses another risk: It gives them more ammunition to retaliate against the United States than if the individual countries were on their own, he said.