The United States has officially suspended its financial contributions to the World Trade Organization (WTO), Reuters said, citing three trade sources.
The move is another milestone for the Trump administration’s relentless push for protectionist trade policies and cutting government expenditures.
A Shift Away from Global Institutions
U.S. President Donald Trump has doggedly put the U.S. on a track that diverges progressively from the rest of the world. His “America First” economic plan had levied hefty tariffs on leading trading nations and pulled out of various global institutions, the WTO, World Health Organization, United Nations, and overseas development schemes.
The WTO had already been weakened in 2019 when Trump blocked new judges from being appointed to its highest appeals court. The action left the central dispute resolution body of the organization half-functional, with Washington arguing that the appellate body was overstepping its mandate in trade rulings.
Understanding the Financial Consequence
In 2024, the WTO had a yearly budget of 205 million Swiss francs ($232 million). The United States, based proportionally to its portion of world trade, was to make approximately 11 percent of this contribution, per available WTO files read by Reuters. Reducing these contributions would compromise the group’s capacity for operations in the future.
New Tariffs Increase Tensions
This week, President Trump raised trade policies even higher by announcing a 25 percent tariff on cars not produced in the U.S. The White House claims that this is to promote domestic production; yet analysts claim that this can lead to devastating upheaval in the global supply chain.
The tariff would take effect on April 2 and has already been termed “liberation day” by Trump. Though the administration projects that the measure will bring in $100 billion annually in revenue, economists caution that it might lead to higher consumer prices and retaliatory trade measures from other nations.
Reactions worldwide to the Tariffs
The action was promptly denounced by U.S. trading partners. Canadian Prime Minister Mark Carney condemned the tariff as “a very direct attack” and pledged to protect Canadian workers and firms.
Meanwhile, European Commission President Ursula von der Leyen warned that “tariffs are taxes—bad for businesses, worse for consumers both in the U.S. and the European Union.” She indicated the EU would assess the impact of these new trade barriers and consider potential responses.
Potential Impact on the U.S.
The U.S. could be penalized by the WTO for not paying its contributions, according to trade sources quoted by Reuters. The rules of the organization provide that members who do not make payments for over a year may be subject to increasing administrative actions.
The longer the dues are not paid, the more severe these actions are, which could affect the U.S.’s ability to shape global trade policy.
What Comes Next?
As the U.S. continues its withdrawal from global trade institutions, the general implications for world commerce are uncertain. As tensions between the U.S. and its trading partners continue to escalate, the coming months can expect retaliatory measures, legal wars, and further interruptions in global trade flows.
Whether this strategy will deliver the economic benefits the Trump administration has promised remains to be seen.
