MFN tariff

A most-favoured-nation (MFN) tariff is the default customs duty a country charges on a given product imported from any fellow WTO member. The principle, codified in Article I of the General Agreement on Tariffs and Trade (GATT 1947) and carried into the WTO framework in 1995, requires that any tariff advantage granted to one trading partner be extended "immediately and unconditionally" to the like product from all other members.

Despite the name, MFN is not preferential treatment—it is the baseline. Lower rates can be applied through two main carve-outs: free trade agreements and customs unions (permitted under GATT Article XXIV) and preferences for developing countries under the Generalized System of Preferences, authorised by the 1979 Enabling Clause. Higher rates may be imposed via anti-dumping duties, countervailing duties, or safeguards, subject to WTO rules.

Each member submits a schedule of concessions listing its bound MFN rates—legal ceilings that cannot be raised without compensating affected partners. Applied MFN rates are often lower than bound rates; the gap is called "binding overhang" and is especially large in many developing economies.

In US domestic law, MFN status was renamed Permanent Normal Trade Relations (PNTR) in 1998. The US extended PNTR to China in 2000, taking effect when China joined the WTO in December 2001. Russia's PNTR was revoked by the US, Canada, and allies in 2022 following the invasion of Ukraine, exposing Russian goods to much higher non-MFN "column 2" tariffs.

MFN tariffs are central to multilateral negotiations: the Uruguay Round (1986–1994) cut average industrial MFN tariffs in developed economies to roughly 4%. Recent debates focus on whether unilateral tariff hikes—such as the US Section 301 duties on China from 2018 onward—are compatible with MFN obligations, a question still working through WTO dispute settlement.