WASHINGTON—The Trump administration’s trade policy over the course of 2025 had the split-screen character of a medieval diptych. The panel to the left, drawing most viewers’ attention, displays unpredictable, ever-changing, and erratic threats of unheard-of levels of tariffs, sometimes threatened over issues unrelated to trade. With this aggressive tariff approach, the White House ignored both preexisting agreements on tariff levels and long-standing obligations to treat trading partners equally.
The panel to the right, by contrast, represents a quest for sound trade-related policy outcomes that are long-standing US objectives often shared by other trading partners. These objectives are largely reasonable and arguably necessary for a sustainable international trading system. This right-hand panel is represented in bilateral trade agreements over the past year and in official statements, such as the administration’s December communication to the World Trade Organization (WTO) on reforming the institution.
For most of 2025 and early 2026, the right-hand panel’s sober, nuanced, and solid prescriptions for fairer trade and a sustainable world trading system were overshadowed by the shocking and sometimes disturbing tariffs and tariff threats in the left-hand panel.
This can and should change in 2026. True, US tariff levels are much higher than previously agreed rates, and the levies discriminate among trading partners. But US tariffs are relatively stable now and generally stand at levels that allow trade to continue. In addition, the power of tariffs as a policy tool has likely diminished since the beginning of 2025, given that the United States has issued a significant and increasing number of tariff exemptions and has not followed through on many of its initial tariff threats over the past year. The Trump administration’s short-lived threat of 10 percent tariffs on several European partners over the recent Greenland dispute, for instance, although shocking, points to the weakening of tariffs as a tool; Trump withdrew the threat without any real concessions from Europe. In part, the administration’s walking back on tariff threats is likely due to the predicted negative effects of tariffs on prices, US manufacturing, and the stock and bond markets. It is also a product of subsequent deals, such as those the White House has recently announced that include tariff reductions with India, Guatemala, and El Salvador.
Returning to the diptych image above, the administration’s tariff-shock approach in the left panel is likely to fade somewhat in 2026, even if it doesn’t disappear entirely. This should create space for more right-panel US trade objectives to come to the fore. So, what are these right-panel objectives for the White House?
WTO reform
In its communication to the WTO in December, the Trump administration advocated several changes to reform the institution. The administration called, for example, for permitting plurilateral agreements, which would prevent nonparticipants from blocking agreements among several member states. The administration also supports applying special and differentiated treatment as a transitional tool for least-developed countries, instead of effectively giving countries a permanent exemption from WTO obligations. And the administration called for improving transparency in the WTO by enforcing and providing technical assistance for notification obligations.
In addition, the United States expressed its long-held view that the WTO is a membership-driven organization whose secretariat should serve a non-substantive administrative role and that acting as an advocate erodes trust in its role as a neutral administrator. It also said that when members invoke the national-security exception to take measures otherwise inconsistent with the organization’s rules, they should be able to do so without being subject to WTO dispute settlement review, which risks politicizing the WTO.
None of these are radical or new notions, and they are all aimed at reinforcing the sustainability of the WTO and the multilateral trading system, not undermining them. To be sure, the Trump administration has also advocated more radical changes surrounding the most favored nation (MFN) principle, arguing that it should no longer apply. But it has done so based on the reasonable argument that MFN status was adopted as a tool in an era of deepening convergence toward trade liberalization that no longer exists.
Far from bomb-throwing against the WTO or the multilateral trading system, these are suggestions that address important and long-standing issues that require thoughtful discussion among WTO members.
The US communication on WTO reform released in December also cites several issues that the organization, as a practical matter, probably cannot take on: trade balances, nonmarket economy overcapacity, and overconcentration of production, economic security, and supply-chain resilience. The argument in the communication is not primarily that the WTO should not take these issues on, should members agree to, but that history indicates that it is incapable of doing so.
With the possible exception of what the White House describes as trade imbalances, these issues are widely recognized as legitimate concerns, even if there is disagreement about whether the WTO can or should address them.
How US bilateral deals fill the gaps
This is where the various US bilateral agreements negotiated over the past year come in. In the absence of effective WTO action, the bilateral agreements address the important issues of nonmarket economy overcapacity and overconcentration of production, economic security, and supply-chain resilience in a way tailored to each partner. The provisions generally encourage or require cooperation and alignment on these issues.
In addition, the US bilateral agreements set out a set of obligations and objectives that are well rooted in traditional US trade policy and WTO rules. The agreements differ in precise wording and level of detail but generally cover the following areas:
- Eliminating regulatory and standards-based nontariff barriers, including cooperation on standards development and conformity assessment, sometimes focusing on specific sectors, such as medical devices;
- Accepting imports of US products meeting international or US standards, including with respect to specific products, such as automobiles;
- Applying the WTO Committee on Technical Barriers to Trade decision on international standards, a regular feature of US free trade agreement negotiations aimed at facilitating exports meeting standards of US-based international standard-setting organizations;
- Adopting “good regulatory practices,” a US trade policy staple aimed at ensuring transparency, public input, and nondiscrimination in the development of regulations;
- Removing nontariff barriers to US agricultural exports, including specific provisions related to facilitating trade in beef, poultry, pork, and dairy;
- Meeting obligations on sanitary and phytosanitary measures on agricultural products that echo obligations under the WTO Sanitary and Phytosanitary Agreement;
- Facilitating digital trade;
- Reaffirming and elaborating on commitments under the WTO Agreement on Government Procurement;
- Cooperating on labor-related trade issues, including the prevention of forced labor and forced child labor;
- Enforcing environmental protections; and
- Enforcing intellectual property rights.
What is striking about these bilateral agreement provisions is how well they align with the objectives and substance of the WTO agreements, sometimes explicitly. They also align with the objectives and substance of current US comprehensive trade agreements and prior comprehensive negotiations, including those with the European Union (EU) and the United Kingdom.
This is not to say that they represent a return to historic templates for trade agreements—they do not—but that many individual elements of previous trade policy objectives and tools clearly remain valid and worth pursuing from the US perspective.
The “right” approach for the year ahead
What would shifting the focus from the left-hand tariff diptych panel to the right-hand panel mean for US trade policy and bilateral trade relations going forward?
First, US trading partners should focus on nuanced and constructive items on the trade agenda, including pursuing meaningful reforms to the WTO. Ideally, this would result in fewer discussions among US trade partners about whether they should retaliate against US tariffs and more discussions of how to address the underlying challenges that prompted them. A focus on WTO reform would also help build a clearer set of obligations for its members and reshape the multilateral trading system to meet the moment.
Second, US trading partners should prioritize removing regulatory barriers to trade and investment, especially in agriculture, in bilateral negotiations with the United States. The moment is ripe, as more US trading partners are embracing a “competitiveness” agenda that includes the removal of unnecessary regulatory barriers.
Third, as the United States actively pushes back on nonmarket economy policies and practices that result in overcapacity and overconcentration, other trading partners will see increased pressure from nonmarket economy goods and from overreliance on single nonmarket sources of production for key products. This should motivate the EU and other trading partners to take their own defensive measures against nonmarket economy policies and to do so in tighter coordination with the United States.
The substance of this recommended engagement is not new. Working with the EU and other trading partners on these joint objectives has always been important, but for many years it has been stymied by difficult politics and institutional constraints.
What is new is the sense of urgency and necessity. This sense of urgency was proximately caused by the Trump administration’s increased tariffs and tariff threats. But more fundamentally, there is an increasingly clear need for the United States and its trade partners to improve competitiveness, respond to nonmarket economy policies and practices, secure supply chains, and address economic security concerns.
