What the WTO is—and what Trump thinks of it
The World Trade Organization, or WTO, was established in 1995 as a means to ensure the smooth functioning of international trade. It was intended to be a forum for international trade negotiation, the resolution of trade disputes, and the distribution of support for developing countries.
It currently has 164 member countries, which represent 98% of the global GDP and 95% of all global trade.
Trump was openly critical of the organization on the campaign trail before his election, and has reportedly claimed that foreign countries use the WTO to “screw the United States.” He also reportedly advisors that he doesn’t know “why we’re in it.”
The “United States Fair and Reciprocal Tariff Act” essentially bestows Trump (or any future president) with the power to determine any current or future tariff rates with countries—outside of the jurisdiction of the WTO.
As Axios explains, it circumvents two of the fundamental principles of the WTO: that of the “Most Favored Nation” and “bound tariff rates.” The first blocks countries from setting different tariff rates for different countries to avoid favoritism. The second creates a tariff ceiling for all WTO countries—to which all of the countries have previously agreed.
