Trump’s Trade Policy and the World Trade Organization

Abstract President Trump’s tariff policies have increased the prices of a wide range of internationally traded goods entering the United States. Contrary to assertions made by the Trump administration, it is very largely the importing country – that is, the United States – that pays the tariffs. The policy has been erratic and subject to frequent changes, adding to uncertainty, as well as reduced trade and risks of increased inflation and macroeconomic instability more generally. The paper examines the impact of the United States’ new trade policy on the WTO, but notes that a series of intractable policy challenges, pre-dating the Trump tariff assault, have plagued the organization for some years. In this context, we identify a loss of negotiating capacity, a growing tendency to rely on preferential trade agreements rather than the WTO to define market access conditions among nations, decision-making stasis, a substantially failed dispute settlement system, and continuing discord among WTO members on the question of entitlement of certain countries to special and differential treatment in response to developmental imperatives. In sum, the destructive consequences of the Trump tariffs and some of the responses to them have further eroded the effectiveness of the WTO, which is already facing significant challenges and is beset by widespread non-compliance. There is an urgent need for governments to come together and reform the WTO if they wish to sustain and benefit from multilateral trade cooperation.