U.S. Halts WTO Funding, Shaking Global Trade Order

U.S. Halts WTO Funding, Shaking Global Trade Order

The United States has suspended its financial contributions to the World Trade Organization (WTO) for 2024 and 2025.

U.S. Halts WTO Funding, Shaking Global Trade Order

This move aligns with President Donald Trump’s effort to reduce funding for global institutions he sees as conflicting with his “America First” agenda. The U.S. also plans to withdraw from organizations like the World Health Organization.

Funding Impact

The U.S. was expected to contribute 11% of the WTO’s $232 million annual budget for 2024. As of December 2024, it owed $25.7 million in unpaid dues, placing it in the WTO’s Category 1 arrears. This classification prevents U.S. representatives from leading WTO bodies or receiving official documents.

Historical Context

The WTO’s dispute resolution system has struggled since 2019 when the Trump administration blocked appointments to its Appellate Body, accusing it of overreach.

The WTO is working on a “Plan B” to address U.S. funding gaps, but details remain unclear. Prolonged arrears could lead to stricter sanctions, though it is uncertain if they will apply to the U.S.

Immediate Operational Impact

The U.S. funding suspension leaves a critical gap in the WTO’s budget. While the organization is developing a response, it may have to adopt austerity measures or seek support from other members. The funding cut could also delay reforms or alternative dispute mechanisms, such as the EU’s proposed appellate process.

Strategic and Institutional Risks

This move reflects Trump’s preference for bilateral deals over multilateral frameworks, weakening the WTO’s role in global trade governance. Although WTO rules allow punitive measures for unpaid dues, enforcement against the U.S. remains uncertain. However, prolonged non-payment could strain diplomatic relations and damage the WTO’s credibility.

The U.S. has demanded stricter limits on the Appellate Body’s authority, including lower compensation for judges and restrictions on case law development. Without U.S. funding, the WTO may face greater pressure to accept reforms that benefit Washington.

Broader Geopolitical Shifts

The funding halt reflects a broader U.S. disengagement from global institutions, creating opportunities for China to expand its influence through initiatives like the Belt and Road. The Trump administration has also cut funding for several international programs beyond the WTO.

• World Health Organization (WHO): The U.S. withdrew in January 2025, halting funding and pandemic preparedness efforts.
• UN Population Fund (UNFPA): Maternal health and family planning programs face potential cuts.
• Global Health Programs: PEPFAR, malaria, and maternal health initiatives risk reduced funding.
• Paris Climate Agreement: The U.S. withdrew in January 2025, stopping climate finance contributions.
• U.S. Agency for Global Media (USAGM): Funding cuts threaten Voice of America and Radio Free Asia.

A 90% freeze on foreign aid has disrupted thousands of programs addressing poverty, education, and disaster relief. The administration has also defunded economic equity programs like the Minority Business Development Agency.

Broader Implications

These funding cuts reflect Trump’s focus on domestic spending over multilateral cooperation. Institutions like the Inter-American Foundation were dismantled earlier.

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The administration’s reliance on Elon Musk’s Department of Government Efficiency to identify budget reductions signals a systemic effort to shrink U.S. global engagement.

The WTO now faces financial instability, a weakened dispute resolution system, and delayed reforms. The shift away from U.S. involvement accelerates fragmented trade governance, reshaping global economic dynamics.

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