Logistics Terms Universal Tariff vs Discriminatory Tariff vs Reciprocal Tariff

Tariffs are taxes imposed by the government on goods imported from abroad and are basic trade policy measures to regulate trade flows and protect domestic industries. Beyond simply imposing taxes, tariffs are used as a policy tool to reflect each country's trade strategy and diplomatic direction.

There are various types of tariffs, but this glossary focuses on three representative types: universal/uniform tariffs, discriminatory tariffs, and reciprocal tariffs. Universal tariffs are a method of applying the same tax rate to imported goods, while discriminatory tariffs apply different tax rates depending on the country or item. Reciprocal tariffs are retaliatory tariffs imposed in response to measures taken by the other country and are often used as a policy countermeasure.

Let’s take a look at the characteristics of each of the three types of tariffs, focusing on the definition, purpose, and application cases.

Definition of Uniform/Universal Tariff

Uniform/universal tariff is a tariff that applies to all countries collectively. It is a tariff imposed according to general standards without preferential treatment or sanctions on a specific country or region, and most countries establish their tariff system based on this uniform tariff. In other words, it can be said to be the most common tariff rate applied to goods imported from countries with no agreement or special trade relations. Through this, the possibility of trade disputes can be significantly reduced.

Purpose of Universal Tariff

• Promoting Fair Trade
  Uniform tariff is the basic tax rate when there are no special standards (such as preferential tariffs, discriminatory tariffs, etc.), and serves as a reference point in the overall tariff system. Through this, each country's trade policy can flexibly adjust the tax rate according to agreements or sanctions based on this basic tax rate.
• Protecting Domestic Industry
  Uniform tariffs protect domestic industries by imposing a certain level of tax on products imported from overseas. In particular, if low-cost imports threaten the domestic market, a certain level of tariff barrier can be a defense line for domestic companies.
• Improving Administrative Efficiency
  Since there is a single tariff rate, it is not necessary to apply complex agreements or exceptions for each item, simplifying customs administration and making it more transparent.
• Maintaining Diplomatic Neutrality
  It is possible to maintain a neutral position in international diplomatic relations because it does not set conditions that are favorable or unfavorable to a particular country.

Examples of Universal Tariff

In the past, Switzerland was often mentioned as an example of actually operating a uniform tariff system by applying a single tax rate to most imported goods for a certain period of time. However, this method gradually disappeared with the spread of multilateral trade agreements, and today's universal tariffs only appear in limited situations.
As a recent example, on April 2nd (local time), the Trump administration imposed a 10% uniform tariff on all imported products into the United States, regardless of country or item. This policy was implemented to protect the manufacturing industry and resolve the trade deficit due to an economic crisis equivalent to a state of emergency.

Definition of Discriminatory Tariff

Discriminatory tariffs are a system that applies different tariff rates depending on the country or item of origin of imported goods and is a policy measure that creates a discriminatory trade environment by giving favorable or unfavorable conditions to specific countries or items. This system has a protectionist characteristic to protect the domestic industry from overseas competition and is based on a perspective opposite to free trade, which applies equivalent conditions to all countries. In other words, while free trade emphasizes openness and competition in trade, protectionism focuses on defending domestic economic interests through strategic choice and control.

Purpose of Discriminatory Tariff

• Utilizing in Strategic Trade
  Friendly nations are subject to lower tariffs, while rival or non-cooperative countries are subject to higher tariffs to reinforce the nation's diplomatic and economic strategies. In particular, if another country takes unfavorable trade measures against its domestic products, the discriminatory tariff is used as a countermeasure.
• Protecting Industry
  Discriminatory tariffs protect producers by applying high tariffs on imports that pose a threat to their domestic industries. As for products involving unfair price competition or government subsidies, damage is minimized through anti-dumping duties or countervailing duties, and they play a role in defending employment and industrial bases.
• Agreement Facilitation & Diplomatic Pressure
  Through the difference in tariff rates, trade agreements can be facilitated or utilized as a means of diplomatic pressure. Discriminatory tariffs strategically adjust the direction of trade by granting benefits to countries that have signed free trade agreements (FTAs) and penalizing non-cooperative countries.

Examples of Discriminatory Tariff

Korea has signed a free trade agreement (FTA) with the United States and the European Union (EU) and is applying lower tariffs on products from those countries. On the other hand, countries that have not signed the FTA are still subject to high tariffs as before, resulting in a discriminatory tariff system.

Definition of Reciprocal/Retaliatory Tariff

Reciprocal/Retaliatory Tariff is a type of tariff that imposes tariffs in the same or similar way as a response measure when a particular country imposes excessive or unfair tariffs on the counterparty country’s domestic products. It is usually referred to as “retaliatory tariffs” and often appears in trade conflicts or negotiations.

Purpose of Reciprocal/Retaliatory Tariff

• Trade Retaliation and Means of Pressure
  In response to the unilateral measures taken by the counterparty country, it minimizes damage domestically and induces changes in attitude through economic pressure.
• Securing Negotiating Power
  Retaliatory tariffs can be used as an effective means to strengthen a country’s position at the negotiating table.
• Urgent Protection of Domestic Industry
  It contributes to defending domestic industries and restoring the balance of imports and exports in unfair competition occurring in a short period.

Examples of Reciprocal/Retaliatory Tariff

April 2, 2025 (local time), the former Trump administration introduced a 10% universal tariff on all imports and imposed an additional reciprocal tariff from 11% to 49% for 57 countries that recorded high trade surpluses with the United States or imposed high tariffs on American products. This measure was implemented as a means of pressure to respond to the unfair tariff policies of trading partners and to gain the upper hand in negotiations.

Understanding tariff types is essential in establishing logistics strategies.
It’s important to accurately figure out the strengths and limitations of uniform tariff, discriminatory tariff, and reciprocal/retaliatory tariff, and to properly utilize them depending on purposes and conditions of trade.
The three types of tariffs have different application methods and economic effects, and knowing them accurately will help you lay a foundation for flexibly responding to the changing trade environment.

Universal Tariff vs
Discriminatory Tariff vs
Reciprocal/Retaliatory Tariff

Q&A

Which type of tariff is effective for protecting the domestic industry with challenging competitive pricing?

Discriminatory tariff.

It is a discriminatory tariff. This type of tariff artificially increases the price of imported goods, giving domestic products a relative price advantage. As a result, it positively impacts the survival of domestic companies and helps maintain employment.

Which type of tariff is more strategic from a protectionist perspective?

Discriminatory tariff.

Protectionism aims to restrict the inflow of foreign products and foster domestic industries. Therefore, discriminatory tariffs, which allow for targeted and customized responses, are a much more strategic and effective tool than general tariffs applied uniformly to all imports.

Which type of tariff is the basic system to maintain trade order?

Universal tariff.

General tariffs serve as the starting point and reference for trade, and they are considered the most fundamental tariff system for maintaining order and fairness in international trade. They play a crucial role in ensuring the fairness and predictability of trade practices.