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The US has finally paid its WTO fees. Now what?

Proposed US reforms to the World Trade Organization’s rules are designed to support the Trump administration’s approach to trade

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12 January 20264 min read

The US has finally paid its WTO fees. Now what?

The US has finally paid its WTO fees. Now what?

In late October 2025, the US quietly paid its overdue fees to the World Trade Organization. The payment indicates a shift in the administration’s attitude to the WTO, which it had blamed for allowing China to continue to claim “developing country” status to avoid action on state subsidies used to produce exports. It follows the withdrawal of the WTO from the list of foreign aid projects the Trump administration had slated for major cuts in September 2025.

US reform proposals would hamper the ability of the WTO to make and enforce trade rules that promote trade and investment for all members.

Evidently at least someone in the Trump administration recognises the value of maintaining US influence in an international organisation the US was instrumental in establishing. This may signal US willingness to engage in international diplomacy in a forum with well-established rules and suggests recognition of American dependence on global trade and investment.

However, the US has proposed reforms to the WTO that would fundamentally undermine the organisation’s capacity to deliver a fairer trading system.

Some of these proposals, such as removing the non-participant veto over new WTO agreements, are sensible. But they must be seen in the context of the Trump administration’s trade policy.

A major plank of the administration’s tariff strategy is to reduce tariff rates in exchange for a country committing to invest in the US. In 2025 a slew of bilateral agreements promised investment in the US and concessions of value to Trump family businesses in exchange for lower US tariffs. Japan committed to invest US$550 billion, while Vietnam offered to approve the Trump organisation’s golf course, purchase Boeing jets and F-16 fighters, and approve SpaceX Starlink satellite services. Details are still being negotiated, and agreements have not stopped the US from continuing to use tariffs as punishment or to extract concessions.

The formula used to set the “Liberation Day” tariffs appeared to reflect a country’s goods trade deficit with the US divided by the value of US exports to the country, with a minimum tariff of 10%. While there is no economic rationale for this approach, it became the starting point for bilateral negotiations.

These differential tariff rates across countries for the same products violated the most-favoured-nation (MFN) rule, which requires countries to offer the same concessions to all WTO members. While the MFN rule has been eroded by preferential trade agreements, it remains a constraining factor on differential treatment.

For many US imports, the tariff rates also exceed their bound rate, the maximum tariff rate the US committed to apply to the product. These rates have declined progressively over rounds of negotiations under the General Agreement on Tariffs and Trade and the WTO to a simple average bound rate of 3.4% for the US.

The US now proposes removing the MFN requirement, undermining a fundamental principle of fair trade. It argues that other countries will freeload on tariff reductions without providing the US any special concessions. But tilting the very unequal playing field slightly in favour of countries with few if any bargaining chips is exactly what MFN is designed to do.

The US has long been able to extract concessions beneficial to its businesses when negotiating trade agreements, but WTO rules constrained any country from imposing tariffs above their bound rates to extract concessions, as the “Liberation Day” tariffs were designed to do.

The second problematic US reform proposal is to let countries define their own security interests to justify tariffs or other trade barriers, despite the broad nature of the existing rules. The US president’s primary legal authorities for setting US tariffs are section 232 of the 1962 trade law (national security) and the 1977 International Emergency Economic Powers Act (IEEPA) on national emergency grounds. Other tariffs, such as for revenue raising, are the responsibility of Congress.

The US also seeks to reduce the research capability of the WTO, impacting its ability to provide independent expert advice.

Unlike section 232, which requires an investigation and report, IEEPA allows the president to act immediately. President Trump has used these powers to justify the “Liberation Day” tariffs, additional tariffs on products such as steel, and tariffs on countries he claims are responsible for shipping fentanyl to the US. With the Supreme Court ruling on the legality of using IEPPA pending, this proposed change to the WTO rules would remove a future objection to widening the use of the national security justification. This would open the door to creative interpretations of “national security”, already cited as the justification for industrial policies in many countries.

Other US reform proposals would hamper the ability of the WTO to make and enforce trade rules that promote trade and investment for all members. These include ruling out WTO support for countries that want to develop agreements to improve supply chain resilience and economic security. Yet the WTO would be well placed to assist such countries with these objectives if plurilateral agreements were allowed. The US also seeks to reduce the research capability of the WTO, impacting its ability to provide independent expert advice.

While US engagement with the WTO is positive, other members need to remain alert to make sure reforms are in the common interest.

About the author

Jenny Gordon

Dr Jenny Gordon is a Nonresident Fellow at the Lowy Institute and also a Honorary Professor at the Centre for Social Research and Methods at the Australian National University.

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