From liberalization to fragmentation: new evidence on global tariff dynamics in the WTO era

Purpose This study aims to investigate the long-run dynamics of global tariff convergence and the emerging fragmentation in the post-2018 period. Focusing on the United States, China, Japan, the European Union, and the world average between 1990 and 2020, the research examines whether countries with initially higher tariff levels have gradually aligned with more liberal trade regimes. By combining ß- and s-convergence tests with structural break analysis and a difference-in-differences estimation, the study identifies major turning points related to institutional reforms and geopolitical tensions, particularly the U.S. tariff escalation after 2018. The results highlight both sustained liberalization and increasing political fragility. Design/methodology/approach This study employs a mixed empirical strategy to assess long-run tariff convergence and recent divergence trends. A balanced panel dataset covering the United States, China, Japan, the European Union, and the world average from 1990 to 2020 is used. First, ß-convergence is tested to examine whether initially high-tariff economies experienced faster reductions, while s-convergence evaluates the decline in cross-country dispersion. Second, structural break analysis, based on Quandt–Andrews unknown breakpoint tests, identifies significant policy turning points. Finally, a difference-in-differences model quantifies the asymmetric impact of the 2018 U.S. tariff escalation. Driscoll–Kraay standard errors address cross-sectional dependence and serial correlation. Findings The results confirm a significant long-term convergence trend in global tariffs, as countries with initially higher protection levels reduced their rates more rapidly. s-convergence analysis shows a steady decline in cross-country tariff dispersion, although the pace of convergence slowed after the 2000s. Structural break tests reveal key liberalization episodes in the European Union (1993), Japan (1995), and China (1994 and 2001), aligned with major institutional reforms. In contrast, the United States experienced a clear divergence after 2018. The difference-in-differences estimates show that U.S. tariffs increased significantly relative to other economies, marking the first major reversal in global tariff alignment. Research limitations/implications The main limitation of this study is the time coverage of tariff data, which ends in 2020. As a result, the analysis does not fully capture the final phase of the Trump administration's protectionist measures or the broader trade disruptions caused by the COVID-19 pandemic. Additionally, the study focuses solely on tariff indicators, excluding the increasing role of non-tariff measures in shaping trade dynamics. Despite these limitations, the findings highlight an important structural shift in global tariff policy and imply that future research should extend the dataset and incorporate non-tariff barriers to evaluate the persistence of post-2018 fragmentation. Practical implications This study provides policymakers with useful insights into the evolving dynamics of global tariff governance. The confirmed convergence trend indicates that international coordination remains essential to sustaining openness, while the identified structural breaks highlight the importance of institutional reforms in accelerating liberalization. The evidence of U.S. divergence after 2018 signals that uncoordinated protectionism can disrupt policy alignment and increase uncertainty for global value chains. Therefore, strengthening the role of the WTO, improving the compatibility of regional agreements, and enhancing multilateral negotiation mechanisms are crucial. The findings also emphasize the need for targeted capacity-building to support developing economies in maintaining trade integration. Social implications Shifts in tariff policy have significant implications for social welfare, employment, and income distribution. The long-term convergence in tariffs has supported consumer benefits through lower prices, broader product variety, and more competitive markets, particularly in developing economies integrating into global value chains. However, the recent divergence led by the United States reintroduces uncertainty that can disproportionately affect workers in trade-dependent sectors and heighten social vulnerabilities in export-oriented economies. Disruptions in supply chains may also increase living costs for households. The results therefore underline that stable and predictable trade policies are essential to safeguard social cohesion and inclusive economic opportunities. Originality/value This study makes a novel empirical contribution by jointly applying ß- and s-convergence tests, structural break analysis, and a difference-in-differences design to global tariff dynamics, offering multidimensional evidence on the evolution of liberalization. Unlike previous research assuming convergence stabilized in the early 2000s, the findings identify the post-2018 U.S. tariff escalation as the first major reversal in the global convergence trajectory. By linking trade policy fragmentation to geopolitical pressures rather than economic fundamentals, the study reveals a new phase in which protectionism emerges within advanced economies. This perspective provides valuable insights for reassessing the resilience and governance of the multilateral trading system.