Tariff structures in developing markets are holding back efforts to add value domestically and export finished goods, limiting firms' access to global markets, research by UN Trade and Development (UNCTAD) has found.
Tariff escalation, where governments impose higher duties on exports of finished goods than raw materials, is widely in place in Africa and other developing economies, UNCTAD says in a policy paper published last week.
In raw material-exporting nations, these structures can help provide a source of government revenue, boost domestic industries where there is strong competition from more established markets, and play a role in negotiating trade agreements.
"However, this practice also discourages value-added processing in countries that produce raw materials, as any value addition would face higher tariffs, therefore providing a disincentive to move up the value chain," the paper says.
As a result, developing economies face barriers when trying to build competitive manufacturing industries - long a key focus in many African markets.
"This reinforces their reliance on raw material exports, limiting opportunities for value addition, job creation and economic diversification," UNCTAD says.
"Additionally, high tariffs on finished goods from developing countries reduce their export competitiveness, making it harder for them to integrate into global supply chains beyond the role of raw material suppliers."
The report finds African governments impose average export tariffs of more than 13% on finished consumer goods, compared to under 4% for primary goods.
By comparison, in developed countries average export tariffs are just 2% for consumer goods and 1% for primary goods.
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The disparity is particularly steep in the manufacturing sector, not just in Africa but also Latin America and South Asia, the report adds. Agricultural exports from developing nations also face average duties of almost 20%.
The findings come as UNCTAD warns of looming uncertainty for 2025 as well as opportunities to grow south-south trade.
"Trade has remained stable in early 2025, but mounting geoeconomic tensions, protectionist policies and trade disputes signal likely disruptions ahead," it says.
"Falling shipping indexes signal weaker demand for manufactured goods, inputs and commodities as businesses adjust to increasing uncertainty."
Although global goods and services trade hit a record US$33tn last year, an expansion of 3.7%, the organisation says momentum slowed during the second half of the year.
Goods trade grew by just 0.5% in the fourth quarter of 2024, while both imports and exports in developed economies dipped 2%.
Yet south-south trade expanded more quickly than trade involving developed nations, it adds, expanding 5% during 2024 and 4% in the last quarter.
