The World Trade Organization (WTO) is facing an existential(future) crisis as the United States, under President Donald Trump, continues to impose tariffs and challenge the organization’s rules-based order. Trump’s aggressive trade policies have sparked debates about the WTO’s relevance and effectiveness in resolving trade disputes.
“The most beautiful word in the dictionary is tariff,” Trump said, highlighting his protectionist stance. Trump’s tariffs have led to increased costs for US consumers and businesses, disrupted global supply chains, and triggered retaliatory tariffs from key trade partners. The WTO’s role in boosting global trade and arbitrating disputes has been called into question.
Critics argue that the WTO prioritizes low prices over protecting homegrown jobs and wages. Trump believes the US has lost out economically to China, citing China’s 2001 WTO entry as a turning point. “When someone like Trump says ‘I’m against all this stuff’ that’s caused [the demise of labour-intensive manufacturing], how do you expect people to behave?” asked Ian Fletcher, economist at the Coalition for a Prosperous America.
Developing countries have also expressed frustration with the WTO, citing rules that limit their development ambitions. Jayati Ghosh, a professor of economics at the University of Massachusetts Amherst, noted that “trade agreements at the WTO have always been heavily loaded in favour of developed country industries.” The WTO’s Trade Related Aspects of Intellectual Property (TRIPS) agreement has been particularly contentious, with critics arguing that it has limited access to affordable medicines and hindered technology transfers.
The WTO’s dispute settlement mechanism has been paralyzed due to the US blocking the appointment of members to the Appellate Body. This has made it easier for countries to break WTO rules without facing penalties. Rob Davies, South Africa’s former minister of trade and industry, said the WTO will “limp along … until we arrive at a more stable multipolar world.”
The WTO’s future remains uncertain, with deep distrust and no clear US leadership. Director-General Ngozi Okonjo-Iweala stressed that “I remain convinced – I am ever the optimist – that a bright future awaits global trade, and the WTO, if we do the right thing.” However, many believe that the organization’s survival depends on reforms that create rules better tailored to today’s realities and more fair to both North and South.
Trump’s tariffs have sparked concerns about the impact on the global economy. The US has imposed tariffs on several countries, including China, Canada, and Mexico, citing national security concerns and unfair trade practices. The tariffs have led to increased costs for US consumers and businesses, with some companies struggling to adapt to the new trade landscape.
The future of the WTO and global trade remains uncertain, with Trump’s tariffs and trade wars posing significant challenges. As the organization marks its 30th anniversary, its members must work together to address these challenges and ensure the WTO’s continued relevance in promoting free and fair trade.