According to Reuters, the United States has halted its contributions to the World Trade Organization (WTO), citing information from three trade sources.
The Background
This report from Reuters arrives as the Trump administration pursues increasingly protectionist trade policies while ramping up efforts to significantly cut government expenditure.
President Donald Trump has also positioned the U.S. towards a broader disengagement from international institutions that he and his associates view as opposing their “America First” economic policies.
This transformation includes implementing high tariffs on U.S. trading partners and withdrawing from international organizations such as the WTO, the World Health Organization, the United Nations, and foreign aid programs.
Jacquelyn Martin/AP
Key Points
Trump’s decision in 2019 to block new judges from being appointed to the WTO’s top appeals court has already significantly weakened the organization.
This move rendered the WTO’s primary dispute resolution system only partially functional, as the U.S. accused the appellate body of exceeding its authority in trade decisions.
In 2024, the WTO had an annual budget of 205 million Swiss francs (around $232 million). Based on a contribution system aligned with each member’s share of global trade, the U.S. was anticipated to account for roughly 11 percent of that budget, as reported by Reuters based on public WTO records.
This week, Trump revealed plans to impose a 25 percent tariff on vehicles not manufactured in the U.S., a strategy the White House claims aims to bolster domestic production, though it could also adversely affect automakers dependent on global supply chains.
The tariff is set to take effect on April 2, which Trump has dubbed “liberation day.”
The White House estimates that the new tariffs could generate $100 billion in annual revenue, yet industry analysts and economists from various perspectives caution that it may disrupt global supply chains significantly and result in increased prices for consumers.
Notwithstanding these warnings, Trump defended the tariffs as a means to restore manufacturing in the U.S., criticizing current cross-border supply chains as “ridiculous” and asserting that “this is permanent.”
Trump’s announcement received immediate backlash from the leaders of major U.S. trading partners, including Canada and the European Union.
Reactions
Canadian Prime Minister Mark Carney stated on Wednesday: “This is a direct assault. We will defend our workers. We will defend our companies. We will defend our nation.”
European Commission President Ursula von der Leyen remarked in a statement Wednesday: “Tariffs are taxes—harmful for businesses, detrimental for consumers in both the U.S. and the European Union,” adding that the EU’s executive body would evaluate the implications of this action and other imminent U.S. tariffs.
Future Implications
Sources informed Reuters that the U.S. may incur penalties from the WTO under its regulations, which state that any member that fails to settle its dues after one year could face “administrative measures” that become more severe the longer payments are overdue.
Update 3/27/25 1:50 p.m. ET: This article has been amended to include additional details and context.
