Trump Tariffs and the World Trade Organization: Has the Multilateral Free Trade System Collapsed?
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Abstract
Although the World Trade Organization (WTO) has been unable to effectively discipline the so-called “Trump tariffs” and has, in practice, permitted the United States to increase tariff rates on 59 trading partners through bilateral negotiations, the multilateral trading system cannot yet be regarded as having collapsed. This assessment rests on two principal considerations. Firstly, with the exception of the People’s Republic of China, affected trading partners have largely refrained from imposing retaliatory import tariffs, and the United States accounts for approximately 11 percent of global trade. The relative share of U.S. trade in the global system suggests that the structural foundations of multilateral trade remain intact. Secondly, the Trump tariffs—grounded in protectionist ideology—stand in marked tension with the core tenets of mainstream economic theory, which generally endorse multilateral free trade. This conceptual inconsistency supports the view that such tariffs are unlikely to prove sustainable over the long term. Nonetheless, two significant “ruptures” has emerged within the multilateral trading system administered by the WTO. In particular, the absence of appointed members to the Appellate Body has rendered the WTO dispute settlement mechanism effectively paralyzed. Consequently, the United States occupies a uniquely advantaged position relative to the other 165 WTO members, as it is the only member able to unilaterally determine import tariff rates by invoking national security justifications without the prospect of effective appellate review.
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