Amy Cao, Stanford University
On January 20, President Trump returned to office. In the month since, the President has levied 25% tariffs against Canada and 10% tariffs against China. After President Trump’s first term already dismantled the World Trade Organization (WTO) and associated guardrails, the effects this time could be catastrophic beyond imagination.
The WTO, composed of 166 member nations, plays a critical role in promoting and governing international trade. The WTO’s most important function lies in its dispute resolution system. Countries may file complaints against unfair trade practices, and a panel reviews whether the case violates WTO rules. Either side can then appeal to a seven-member appellate body whose rulings are final. This system ensures that trade conflicts are resolved through legal mechanisms rather than economic retaliation.
However, Trump’s first administration significantly weakened this WTO function following filings against American actions in the U.S.-China trade war. Trump’s U.S. Trade Representative Robert Lighthizer blocked all judge appointments to the dispute settlement branch of the WTO, which requires unanimous approval by members. As the seven-year terms of judges expired without replacements, the number of appellate justices shrunk from seven to five in August 2017. By late 2019, the appellate body was effectively defunct, falling below the minimum of three judges necessary to review appeals. The Biden administration continued this blockade, leaving the appellate system paralyzed.
Without judges to hear appeals, the consequences of a broken appeals system are severe. If the WTO rules against a country, that nation can simply appeal the decision and “delay its enforcement indefinitely,” which is known as appealing “into the void.” Indonesia, for example, used this loophole to sidestep a WTO ruling against its raw nickel export ban, disrupting global supply chains and EV markets around the world. The United States is one of the worst offenders, responsible for 38% of appeals into the void. As a result, two-thirds of WTO rulings now go unenforced, and global disputes have fallen to just one-third of pre-2019 levels. After all, countries are less willing to file complaints if they are likely to remain unresolved.
Without a functioning WTO, conflicts are spiraling into the “damaging cycles of tariffs” and costly trade wars that the organization seeks to prevent. As the U.S. imposes 25% tariffs on Canada and 10% tariffs on China, with both countries retaliating with tariffs of equal magnitude, the lack of guardrails appears increasingly foreboding.
Clearly, the WTO serves the interests of average Americans and could insulate U.S. consumers from alarming economic consequences. The WTO has often benefited citizens by ruling against politically popular but economically harmful policy. For example, the Bush administration imposed steel tariffs to gain political support in swing states Pennsylvania and Ohio. However, when the EU retaliated with its own tariffs, the U.S. faced massive job losses and higher costs for businesses reliant on steel. The WTO then intervened, ruled against the tariffs, and forced their repeal—ending two years of economic pain.
Similar guardrails against the second Trump administration would save American consumers—protecting jobs and keeping prices stable. Take President Trump’s 10% tariff on all Chinese imports, which violates WTO policy against unilateral tariff increases, as per China’s legal filing with the organization. A functioning WTO could side with China, preventing the United States from passing on $40 billion of costs to consumers. Or take Canada’s case with the WTO, which if successful, could prevent households from paying an additional $309 per year.
However, today’s WTO is significantly weakened, leaving little to prevent the fallout from President Trump’s aggressive trade agenda. Without an appellate body to challenge his tariff plans, U.S. households could face an additional $1,200 in annual costs due to rising prices on imported goods. At the same time, over $2.2 trillion in trade will be upended, triggering an estimated 330,000 job losses across the United States.
The WTO may not be perfect, but its decline poses far greater costs—ones that will fall squarely on American workers and consumers. Revitalizing the WTO isn’t just about preserving global trade; it’s about protecting U.S. jobs, stabilizing prices, and keeping America a key player in the global economy. Otherwise, we will be left behind as fifty-four countries—including the EU, China, Canada, Australia, and Japan—move towards an alternative appellate dispute system, building a global trade order without us.