WTO faces crucial test amid Trump’s tariff gambit

As global trade faces mounting challenges, the future of the WTO depends on whether nations can unite to preserve the rules-based system or risk a fragmented new era.
WTO, US, World Trade Organization, Digital Commerce, World Trade Agreement

The World Trade Organization (WTO) recently marked its 30th anniversary in a subdued ceremony, overshadowed by a growing threat to the global trade system – Donald Trump’s tariff policies. The US president’s plan to impose ‘reciprocal’ tariffs has unsettled global markets, causing the WTO to warn that international trade could shrink significantly.

Economists fear that Trump’s preference for bilateral deals over multilateral cooperation risks dismantling the rules-based system the WTO was designed to protect. WTO Director General Ngozi Okonjo-Iweala has called the situation an opportunity to reform and modernise the organisation, emphasising the urgent need to strengthen global trade rules.

While some countries are tempted to negotiate directly with Trump to shield their economies, experts like Dartmouth’s Robert Staiger stress that coordinated, multilateral action is the only way to preserve the integrity of the global trading framework. Past failures like the Doha Round haunt such efforts, but today’s crisis might spur the collective will needed for serious reform.

Inside the WTO, countries are exploring responses, from informal consultations to calls for emergency meetings. Meanwhile, China has seized the moment to bolster its standing as a defender of multilateralism, rallying other nations and filing formal complaints against US tariffs.

However, divisions persist, with some countries already negotiating separately with the US, undermining hopes for a unified front. The uncertainty surrounding America’s future in the WTO continues to loom large.

Though US funding is frozen and debates about membership persist, the appointment of a new US representative suggests Washington isn’t abandoning the body just yet. As Trump’s tactics force tough choices on the global community, experts warn that capitulating to bilateralism could permanently wreck the multilateral system – a risk the world can scarcely afford to take.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!