Nontariff Trade Barriers in the U.S. and EU

International trade is shaped not only by tariffs but also by a range of regulatory measures that affect market access. These nontariff measures (NTMs)—such as technical regulations, sanitary and phytosanitary requirements, and licensing rules—are often introduced to achieve public policy objectives like protecting health, safety and the environment.

But NTMs can also serve as trade policy tools, with some designed specifically to limit imports and support domestic industries. Since NTMs operate within complex legal and administrative frameworks, it is often difficult to distinguish between those primarily intended to regulate markets and those introduced deliberately to limit trade.

While much of the focus of trade tensions usually revolves around tariffs, nontariff trade barriers can significantly limit the extent of international trade across countries.For evidence of this phenomenon, see, for example, Lionel Fontagné, Gianluca Orefice, Roberta Piermartini and Nadia Rocha’s 2015 Journal of International Economics article, “Product Standards and Margins of Trade: Firm-Level Evidence”, and Hiau Looi Kee, Alessandro Nicita and Marcelo Olarreaga’s 2009 article in The Economic Journal, “Estimating Trade Restrictiveness Indices.” This blog post investigates the extent to which countries make differential use of nontariff trade barriers, creating asymmetric access to their domestic markets for foreign exporters. To do so, we focus on the U.S. and the European Union (EU), two large, developed economies in which regulatory technology, standards and needs are unlikely to differ significantly.

Measuring NTMs and Data Approach

To analyze NTMs, we used data collected by the World Bank and the U.N.’s trade and development agency, UNCTAD, available through the World Bank’s World Integrated Trade Solution. These data provide a detailed breakdown of NTMs imposed by different countries across industries and regulatory categories. Our analysis employs 2014 data for the U.S. and 2016 data for the EU. These data remain the most detailed available with key summary statistics for NTMs at sectoral and regulatory levels. More recent datasets either lack the same granularity or omit information on the type of regulation. Additionally, NTMs tend to evolve gradually, reflecting long-term regulatory frameworks rather than short-term policy shifts.

To quantify the prevalence of NTMs within U.S. and EU trade flows, we focused on frequency ratio, which measures the share of six-digit Harmonized System product codes affected by at least one NTM.

While this metric serves to quantify the extent of NTMs across economies, it does not account for differences in regulatory intent, making it difficult to distinguish whether a given measure primarily serves public policy objectives or is intended to restrict trade. Similarly, it does not capture the intensity of the regulations—some NTMs may be mildly restrictive, while others may be very stringent.

Sectoral Differences in NTMs

The figure below contrasts the prevalence of NTMs across industries, using the frequency ratio to show that while both the U.S. and the EU impose NTMs in all sectors, their incidence varies significantly.

NTM Frequency Ratio for the U.S. and EU by Sector

SOURCES: World Bank’s World Integrated Trade Solution and authors’ calculations.

The EU has a higher prevalence of NTMs than the U.S. in 13 out of 15 broad sectoral groups, suggesting a more extensive use of regulatory measures. The largest gaps between the two economies occur in manufactures such as footwear and machinery and electrical equipment, where NTMs are far more frequent in the EU than in the U.S. The EU also applies more NTMs in food-related sectors (animal, vegetable and food products), reflecting a broader regulatory approach.

These trends may reflect differences in regulatory priorities, such as ensuring product safety, environmental protection or support for domestic industries. The higher frequency of NTMs in the EU suggests a more comprehensive approach to regulation, which may create higher compliance costs for exporters to that economy. While the U.S. does impose NTMs in the same industries, their relative prevalence is generally lower, indicating a more targeted regulatory approach.

Types of NTMs

Beyond sectoral differences, the types of NTMs differ systematically between the two economies. The next figure presents the shares of all product codes in the U.S. and the EU that are subject to alternative types of regulation. That is, we report the frequency ratio for these economies by regulation type.

NTM Frequency Ratio for the U.S. and EU by Type of Regulation

SOURCES: World Bank’s World Integrated Trade Solution and authors’ calculations.

The EU has a higher incidence of NTMs in five out of seven categories, suggesting a broader application of regulatory measures. The largest gaps where the EU exceeds the U.S. are in technical measures, export-related regulations and import licensing, reflecting stricter product standards and administrative requirements for trade.

In contrast, the U.S. has a higher incidence of NTMs in finance and shipment inspection, indicating a greater emphasis on financial trade regulations and compliance checks before goods enter the market. These differences highlight how each economy prioritizes different aspects of trade regulation, shaping the costs and requirements faced by exporters to them.

Conclusion

Nontariff measures shape global trade by enforcing health, safety and environmental regulations, but they can also act as trade barriers. While both the U.S. and the EU have imposed NTMs across all sectors, the EU has applied them more broadly and has relied more on technical measures, export-related regulations and import licensing, whereas the U.S. has emphasized financial regulations and shipment inspections. These differences create asymmetric compliance costs for exporters across countries. Addressing these challenges through mutual recognition agreements or regulatory harmonization could help reduce trade barriers while preserving regulatory objectives.

Note

1. For evidence of this phenomenon, see, for example, Lionel Fontagné, Gianluca Orefice, Roberta Piermartini and Nadia Rocha’s 2015 Journal of International Economics article, “Product Standards and Margins of Trade: Firm-Level Evidence”, and Hiau Looi Kee, Alessandro Nicita and Marcelo Olarreaga’s 2009 article in The Economic Journal, “Estimating Trade Restrictiveness Indices.”